How to withdraw your CIT or PF balance in Nepal
Cashing out your EPF or CIT balance in Nepal: the conditions that let you withdraw, the documents, the portals, and the 5% retirement tax that takes the top off a big lump sum.
A reader who had just retired from a college teaching job wrote in with a simple-sounding question and a number. He had about Rs 28 lakh sitting between his Provident Fund at Karmachari Sanchaya Kosh and a CIT account he had topped up for years. He knew the money was his. What he did not know was how to get it out, how long it would take, and how much the tax office would take on the way.
That gap is common. People spend thirty years feeding these accounts and almost no time learning the exit. The deposit side runs on payroll autopilot. The withdrawal side is a counter, a form, and a tax rule most people meet for the first time on the day they need the money.
What you are actually withdrawing
Two different institutions, two parallel pots. A quick orientation; the full decision math sits in the CIT vs PF vs SSF post.
- PF (EPF). Run by Karmachari Sanchaya Kosh. Typically 10% from you and 10% matched by the employer, accumulating in an individual account in your name, with profit declared each year. EPF pays a base rate of 4.25% on the deposit plus an annually declared profit share on top.
- CIT (Citizen Investment Trust / Nagarik Lagani Kosh). The relevant pot for most salaried members is the Employee Savings Growth Retirement Fund (कर्मचारी बचत वृद्धि अवकाश कोष). Contributions plus annually declared returns, paid out as a lump sum on retirement or resignation. CIT also runs a separate Citizen Pension Scheme, where the benefit is a pension from age 60 with at least 15 years of contribution, not a freely withdrawable balance.
The income earned inside both funds is tax-free while it sits there. Section 64 of the Income Tax Act 2058 exempts the income of an approved retirement fund from tax, which is why the balance compounds untouched until you pull it out.
When you are actually allowed to withdraw
This is the part people get wrong. The money is yours, but "yours" and "withdrawable today" are not the same thing.
| Trigger | EPF | CIT (Employee Savings Growth Fund) |
|---|---|---|
| Retirement | Full balance payable | Full balance payable |
| Resignation / leaving service for any reason | Full balance payable | Full balance payable |
| Permanent migration abroad | Full balance payable | Early refund path exists for those who cannot continue |
| Death | Nominee / legal heir claims | Beneficiary claims |
| Still employed and contributing | Loan only, no cash withdrawal | Loan only, no cash withdrawal |
The EPF service pages put it plainly: the fund is accessible "after retirement or detachment from the office due to any reason." There is no penalty for taking the balance on resignation rather than waiting until 60. Your own contributions, the employer's matched share, and all accumulated profit come out together, with no forfeiture of the employer's portion.
One detail worth knowing if you are not in a rush: if you retire and leave the EPF balance untouched, it keeps earning regular interest and profit for up to six years. So retiring is not a deadline to withdraw the next morning.
The tax: small payouts walk free, big ones lose a sliver
The single number that shapes every withdrawal decision is the retirement-payment tax. It works through two statutory steps under Sections 65 and 88 of the Income Tax Act 2058.
Step one, the deduction. From the total payment you subtract the higher of Rs 5,00,000 or 50% of the payment. That subtracted amount is the tax-free portion.
Step two, the tax. Whatever is left is treated as gain and taxed at 5%, withheld at source as a final tax. Final means it is settled there; you do not add it to your annual income or file on it again.
Run it across a few balances and the design becomes obvious.
| Lump sum | Tax-free deduction | Taxable gain | 5% tax | Net in hand |
|---|---|---|---|---|
| Rs 5,00,000 | Rs 5,00,000 (the floor) | Rs 0 | Rs 0 | Rs 5,00,000 |
| Rs 10,00,000 | Rs 5,00,000 (the floor) | Rs 5,00,000 | Rs 25,000 | Rs 9,75,000 |
| Rs 20,00,000 | Rs 10,00,000 (50%) | Rs 10,00,000 | Rs 50,000 | Rs 19,50,000 |
| Rs 50,00,000 | Rs 25,00,000 (50%) | Rs 25,00,000 | Rs 1,25,000 | Rs 48,75,000 |
Below Rs 10 lakh the Rs 5,00,000 floor does the shielding. Above Rs 10 lakh the 50% rule takes over, so the taxable half is always exactly 50% and the effective tax rate flatlines at 2.5%. CIT's own FAQ describes the same three bands in plain language: nothing up to Rs 5 lakh, 5% on the slice above Rs 5 lakh in the Rs 5–10 lakh range, and 5% on half the balance above Rs 10 lakh.
A caution for the rare case: this gentle treatment applies to payments from approved retirement funds, which EPF and CIT are. A purely employer-funded gratuity sitting outside an approved scheme is taxed harder. The gratuity post covers that 5% versus 15% fork.
Withdrawing from CIT: the cleaner of the two
CIT documents its process publicly, which makes the claim predictable.
For a retirement or resignation payout from the Employee Savings Growth Retirement Fund, the document set is:
- Your CIT identity card (or proof of identity if it is lost).
- A retirement or resignation letter addressed to CIT, with an open date.
- A copy of your citizenship certificate.
- The fund payment / deduction form.
You apply and track through CIT's eService portal and the CIT mobile app, and the payout lands in your bank account, frequently routed over ConnectIPS, with an SMS confirmation. CIT states that once a claim is processed, the accumulated amount is transferred within hours. A power of attorney is accepted if you cannot present yourself, provided both parties submit citizenship copies.
The employer's role is narrow: the retirement or resignation letter is what they issue. There is no separate layer of recommendation beyond that.
Withdrawing from EPF: still mostly a counter job
EPF has gone digital for viewing and for loans. It runs an iPortal (iportal.epf.org.np) and an EPF mobile app where you can see your total contribution, pull statements, check declared rates, manage KYC, and even apply for and repay loans by QR or mobile banking.
What the app does not yet offer is self-service final payment. The actual withdrawal of your accumulated balance still runs through the EPF office. In practice the claim is built around a withdrawal application, your employer's release or recommendation letter confirming you have left service, your citizenship certificate, and your bank details for the payout.
Processing is not instant the way CIT's post-approval transfer is; allow a few weeks from a complete file to the money landing, and follow up if it stalls. EPF has openly reported cases of members whose payments were held up because they changed offices, because an employer deducted contributions without telling the worker, or simply because the member never came to claim. Around two thousand such untraceable cases were reported a few years ago. The lesson is mundane: keep your EPF number, your contact details, and your bank account current, and do not assume the money finds you.
Withdrawing while still employed: it is a loan, not a cash-out
If you need money before you leave the job, you cannot withdraw your contributions. What you can do is borrow against the balance. EPF offers special loans plus purpose loans for home, education, home maintenance and land, priced around 7% to 7.25%. CIT lends against your accumulated amount on similar logic.
A loan keeps the balance compounding while giving you liquidity, and it sidesteps the withdrawal tax entirely because nothing is being paid out as a retirement benefit. The trade-off is that the outstanding loan is netted against your eventual payout. The full comparison is in loan against your CIT or PF balance.
When the member dies
The balance does not vanish; it transfers. This is one slice of the broader machinery covered in claiming assets after death in Nepal.
- EPF. The recorded nominee receives the balance. If no nominee was named, or the nominee has died, it passes to the legal heir under prevailing inheritance law. EPF also pays the heir a separate lump-sum funeral grant (काजकिरिया अनुदान) when a member dies in service; confirm the current amount with KSK.
- CIT. The beneficiary submits a death certificate, a relationship-proof certificate, a beneficiary affidavit with citizenship copy, the deceased's citizenship copy, the CIT identity card, and the payment form.
The single most useful thing you can do for your family is record a nominee now, while it is a five-minute form, rather than leaving them to prove heirship later.
A note for SSF members
If your employer moved you to the Social Security Fund, the withdrawal logic is different and stricter, because SSF is built as social protection rather than a savings pot. The pension portion generally cannot be taken as a lump sum: it is payable after age 60, and a monthly pension needs at least 180 months (15 years) of contribution. Members enrolled under the older Retirement Benefit Scheme arrangement can access that portion on job termination or at 60. The EPF-to-SSF transition post covers what changes when your employer switches you over. Do not assume your SSF balance behaves like an EPF lump sum you can break on resignation.
What you actually need to know
Three things, in order of how much money they move:
- The withdrawal is gated by your employment status, not your wish. EPF and CIT pay out in full on retirement, resignation, permanent migration, or death. While you are employed, your only early-access tool is a loan against the balance. Plan the cash-out around the exit event, not around a sudden need.
- The tax is mild and capped. The higher of Rs 5 lakh or half the payment is shielded, and the rest is taxed at 5% final. Small balances come out clean; even a large lump sum loses only 2.5% at the top. This is rarely a reason to delay a withdrawal you genuinely need, and never a reason to leave money you do not understand sitting unclaimed.
- CIT is the smoother exit; EPF needs legwork. CIT publishes its document list and transfers within hours of processing. EPF still runs the final payment through the office, so build a complete file once and keep your records current so the money does not get stuck.
If you are mid-withdrawal and a number on your statement or a step in the process looks off, email parjanya57@gmail.com with the specific line. Real cases make the next reader's claim faster.
This post is part of the Nepal Money Basics guide — the retirement section.