Rajju Khadka and Nisha Thoker added one goal each as Nepal scored four goals each on either side of the half.
Islamic Republic of Iran, which recorded a resounding 18-0 win over Maldives in an earlier match, joined Nepal in the last-four as a group A runner-up.
Likewise, Bangladesh routed Bhutan 16-0 to advance into semis as the group B winner with seven points.
Winning all of its matches, Nepal accumulated nine points in the process. Iran, which has lost its opening match against host Nepal, gathered six points from three matches.
Nepal will take on group B runner-up India in the first semifinal at the Dasharath Stadium on Friday while Iran will challenge Bangladesh later in the day.
Commenting on the match, Nepal coach Kishore KC said that he was cent percent hopeful about keeping the title home but also acknowledged that the host team should work on its finishing skills.
"I will not say that we did not play well but our shooting could have been better. Going into the next stage will be challenging. Nevertheless, we are hopeful about winning the championship," he said.
Making a good start, Nepal missed out on at least four scoring opportunities before breaking the deadlock in the 13th minute. Rekha put Nepal on the driving seat, scoring a brilliant goal with solo effort. Saru Limbu could have put Nepal on the lead two minutes before had her attempt not been denied by the woodwork.
Manisha doubled Nepal's advantage in the 21st minute and scored her second five minutes later to put the host on 3-0 lead.
Saru scored Nepal's fourth goal in the 29th minute to give the home side a four-goal cushion in the first half.
Nisha scored Nepal's fourth goal in the 39th minute before Rekha had scored her second and teams sixth in the 45th minute.
Saru made it 7-0 scoring her second goal in the 47th minute as Rajju scored the last goal of the match five minutes from time.
"It was a great experience playing against Nepal. We already knew that it was a tough match for us because I had watched Nepal against Iran in the opening day," said Sri Lankan coach Kei Homma, who is a Japanese international.
Meanwhile, Fatemeh Ghaseni scored five goals (5th, 11th, 36th, 42nd and 45th) for Iran while Golnoosh Khosravi netted four times (8th, 13th, 35+1st, and 43rd) minute in its thumping of Maldives.
Haniesh Khodaparasti (14', 54' and 67') scored three goals, Saba Javadi netted twice (29', 59'), as Fatemeh Tahmasebi (17'), Kiana Kafiabadi (39'), Maryam Mohammadi (21') and Mobina Etemad (70+1') contributed one each.
Likewise, Sanjibda Akther (26', 38', 49', 50') and Marzia (14', 23', 29, 68'), scored four times each for Bangladesh as Jahan Moushumi (19', 44', 46') completed treble of goals. Maria (2', 42') scored two goals as Krishna Rani (6'), Mosammat Sirat Jahan Shopna (12'), and Tohura (57') contributed one goal each.
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