How to read your Nepali salary slip: PF, SSF, CIT, TDS, and what every line actually means

The contract said रू 65,000. The first salary email landed at रू 51,000. Somewhere in between, six or seven cryptic line items chipped away at it: PF, SSF, CIT, TDS, SST, plus a couple of allowances I didn't fully understand.

I spent an hour with my HR the next day. Then a second hour googling. Then I gave up and asked my chartered-accountant cousin. The answer is not actually that complicated, but it is genuinely hard to find written down anywhere in plain language.

So here it is. The structure of the slip is stable across companies even though specific amounts and slabs change every fiscal year. For current tax rates, the IRD is the only authoritative source.

The two halves

Every Nepali salary slip has two columns: what you earn, and what comes out. Bottom line is Gross − Deductions = Net Pay, the amount that lands in your bank.

If the only number you ever look at is the net, you're missing roughly 20% of your real compensation. The PF/SSF and CIT lines are real money. They're just delayed.

Earnings

Basic Salary

The foundation of the rest of the slip. PF, SSF, CIT, gratuity, and most allowance ratios are calculated as a percentage of basic, not gross. Two job offers with the same gross can have very different real value depending on how the basic is structured, because a higher basic means more of your retirement contributions get matched.

When you're negotiating, ask for the basic figure separately.

Allowances

The grab-bag below basic. Common ones in Nepal:

• Dearness Allowance (DA). Cost-of-living top-up, usually a percentage of basic. Mostly relevant in government and larger private firms. Taxable.
• House Rent Allowance (HRA). Some private firms carve a portion of compensation here. Unlike in India, HRA in Nepal is fully taxable; the label doesn't buy you a tax break.
• Communication / Transport / Field. Smaller fixed amounts for phone, fuel, or fieldwork. Most are taxable. A few categories like uniform allowance may be exempt up to limits — your accountant can confirm.
• Festival Allowance (the Dashain kharcha). Customarily one extra month of basic, paid before Dashain. Some firms pay it as a lump sum in the Ashwin/Kartik slip; some prorate it monthly so cash flow stays smooth. Either way it's taxable.
• Overtime. Hourly above the standard rate, multiplier set by the Labour Act. Taxable.

The sum of basic + all allowances + monthly bonus portion is Gross Salary. This is the number tax is calculated on.

Deductions

Some of these are yours, going to your future. Others are the government's. Most people lump them together and assume the slip is just taking money away.

Provident Fund (PF) — if your firm runs on EPF

The employee contributes 10% of basic, and the employer matches another 10% of basic. Both go to the Employees Provident Fund (EPF) in your name. You can withdraw on retirement, on resignation (with conditions), or for specified purposes like housing or medical.

The employee 10% reduces your taxable income, subject to a combined cap with CIT (more on that below).

The employer's 10% match is real compensation. It doesn't hit your bank, but it's yours. Count it when comparing offers.

Social Security Fund (SSF) — if your firm is on SSF instead

Operational since 2018, SSF bundles PF, gratuity, and a stack of insurances (medical, accident, maternity, dependents, old-age) into one contribution. Employee pays 11% of basic, employer pays 20% of basic. The employer side is meaningfully richer than EPF's 10/10 split.

Tax treatment of the employee portion is the same as PF: deductible.

You see one or the other on your slip, never both. If your employer is registered with SSF, the line says "SSF". If not, you'll see "PF" with a 10% deduction. Most large private firms have moved to SSF over the past few years. Older and smaller firms are slower.

Citizen Investment Trust (CIT)

Voluntary. You decide to contribute, the money sits in CIT and earns interest, and the contribution reduces your taxable income that year.

This is the main reason people use it. The combined deduction for PF/SSF + CIT is capped — the cap and percentage move with the budget, but historically you can deduct up to one-third of taxable income or a fixed ceiling, whichever is lower. Check the latest IRD circular or your HR before maxing your CIT.

Worth contributing to if you're in the 20%, 30%, or 36% slab. At those rates every रू 1,000 saves you रू 200–360 in tax while still earning CIT interest. At the 1% slab, the saving is small enough that the cash is more useful in your hand.

Tax Deducted at Source (TDS)

Your monthly income tax. The employer estimates your annual taxable income, calculates the year's tax across slabs, divides by 12, and deducts the same amount each month. They remit it to the IRD on your behalf.

Nepali income tax is slab-based and progressive. The exact bands change with each year's budget, but the structure is consistent: a small first slab at 1% (the SST), then progressively higher rates (10%, 20%, 30%, 36% historically). Married filers get a wider first slab than single filers.

If you have deductions your HR doesn't know about — CIT contributions made privately, life insurance premiums, donations to approved organisations — tell them. They'll factor it in and your monthly TDS will drop. If you don't, you can still claim them when you file your return at year-end.

Social Security Tax (SST)

A 1% tax on the first slab of taxable income. This is not the Social Security Fund. The name is unfortunate.

Sometimes broken out as its own line, sometimes folded into TDS. Either way it's already in the slab calculation.

Insurance and loans

If your employer offers group medical or life insurance and deducts the premium, it shows up here. Life insurance premiums up to a certain annual limit are tax-deductible, so keep the certificate for filing.

Staff-loan EMIs (for housing, vehicles, education) also appear in this column for some employers. They're repayments, not tax-related deductions.

A worked example

Take a salaried professional on a basic of रू 50,000 with allowances bringing gross to रू 65,000, employed at a firm registered with SSF.

Line	रू/month	Notes
Basic	50,000
Allowances (DA, communication, transport)	15,000	All taxable
Gross	65,000
SSF (employee, 11% of basic)	(5,500)	Goes to your SSF account
CIT (voluntary)	(5,000)	Reduces taxable income
TDS	(~3,500)	Estimated; varies with year, deductions, status
Net Pay	~51,000	What hits your bank
Employer SSF (20% of basic)	+10,000	Doesn't hit your bank, but it is yours

True compensation works out to रू 71,500/month: रू 51,000 net + रू 5,500 SSF + रू 5,000 CIT + रू 10,000 employer SSF. Only रू 51,000 lands in your account.

That's the half people don't see. Most of it is going to your retirement, with insurance bundled in. It is not lost. It is delayed.

Three questions everyone eventually has

My TDS jumped this month. The employer recalculated your annual estimate after a bonus, increment, or one-time payment got added. The extra tax gets spread across the remaining months of the fiscal year, so TDS rises until Asar and resets in Shrawan.

Can I reduce my TDS legally? Yes. Route more income through deductible vehicles (PF/SSF, CIT, life insurance, approved donations) and tell HR about deductions they don't know about. You won't eliminate it. You can usually optimise it.

The maths on my slip doesn't match what I calculated. Three places to check, in order: which "basic" figure your employer used (some firms apply a different basic for PF than for tax), whether bonuses or allowances were front-loaded into one month, and whether prior-month adjustments are bundled into the current slip. If none of those explain it, walk to HR with the slip — they should be able to break the calculation down line by line.

Tracking it in an app

In Kharchapatra (or any budget app), the rule is simple: income is your net pay, the actual amount that landed.

PF/SSF/CIT contributions are already deducted before the money reaches you. Don't log them as expenses too — that's a double-count.

Tag the festival bonus distinctly when it arrives. It distorts the month's income chart, and you'll want to remember it's a one-time spike when you look back at the year.

Once you know what your net pay actually is, the next question is how much of it to save. We covered that here: How much should you save from your Nepali salary.

Got a slip line item we didn't cover? Email parjanya57@gmail.com.