The aircraft bearing call-sign 9 NAET had flown from Pokhara to Jomsom at 9:55 AM and went out of contact after reaching the Lete area of Mustang.
As per the State TV, the missing aircraft was hosting 4 Indians among others.
"The aircraft was seen over the sky of Jomsom in Mustang and then had diverted to Mt. Dhaulagiri after which it hadn't come into contact," chief district officer Netra Prasad Sharma confirmed ANI over the phone.
As per the police officials, the aircraft has been suspected to have crashed in the "Titi" area of Lete in Mustang district.
"Locals from Titi have called and informed us that they have heard an unusual sound as if there was some bang. We are deploying a helicopter to the area for the search operation," Ram Kumar Dani, DSP of district police office, Mustang told ANI.
The home ministry has deployed two private helicopters from Mustang and Pokhara for the search for missing aircraft. Nepal Army chopper is also being prepared to be deployed for the search, said Phadindra Mani Pokharel, spokesperson at home ministry told ANI over the phone.
Mustang is one of the mountainous and fifth-largest districts of the Himalayan nation which hosts the pilgrimage of Muktinath Temple. The district, also known as "Land beyond the Himalayas", is located in the Kali Gandaki valley of the Himalayan region of Western Nepal.
Mustang (from the Tibetan Muntan meaning "fertile plain") the traditional region is largely dry and arid. The world's deepest gorge that goes down three miles vertical between Dhaulagiri and Annapurna mountains runs through this district.