SSF 31% on basic. Slabs by status. Nepal payroll, solved.
Nepal’s payroll runs on a Bikram Sambat fiscal year and a single Social Security Fund. It demands a live SSF contribution engine at 31% of basic salary, income tax on progressive slabs that differ for individuals and couples, the 1% social security tax waived only for SSF contributors, monthly TDS deposits, and in-country people with direct authority relationships. Most providers deliver two of these. Mercans delivers all of them – on a single proprietary stack with no intermediaries.
native payroll
vs nearest peer
since inception
- Income Tax
- 1–39% progressive
- Corporate Tax
- 25% (30% banks/telecom)
- Total SSF Contribution
- 31% of basic salary
- Employer SSF
- 20% of basic salary
- Employee SSF
- 11% of basic salary
- Provident Fund
- 20% (ER 10% + EE 10%)
- Gratuity
- 8.33% employer (in SSF)
- SST First Band
- 1% – waived for SSF members
- Overtime
- 150% of wage rate
- Sick Leave
- 12 days / year
- Home (Annual) Leave
- 1 day per 20 days worked
- Minimum Wage
- NPR 19,550 / month
- SSF Base
- Basic salary (not gross)
- Notice Period
- Up to 30 days
- Fiscal Year
- Mid-Jul to mid-Jul (BS)
Payroll compliance: the details that can’t be missed
Nepal’s regulators reconcile silently, then assess. The Inland Revenue Department matches monthly TDS deposits against the annual return and the withholding statement. The Social Security Fund assesses contributions on the correct basic-salary base and flags non-enrolment. Labour officers enforce gratuity, leave, and overtime under the Labour Act 2017. The 1% social security tax is waived only for SSF contributors – apply it wrongly and every payslip is off. None of these failures announce themselves – they accumulate until an assessment makes them very visible.
SSF non-enrolment or wrong base
SSF contributions of 31% are due on basic salary for enrolled employers under the Social Security Act 2074. Failing to enrol, or contributing on an understated basic component, triggers retroactive assessment plus interest and blocks employee scheme entitlements.
1% SST applied to SSF members
The 1% social security tax on the first income band is waived for SSF contributors, pensioners, and sole proprietors. Charging it to SSF members over-withholds tax; omitting it for non-members under-withholds. Both surface on the annual reconciliation.
Late or short monthly TDS deposit
Tax deducted at source on salary must be deposited to the IRD within 25 days of each Nepali month-end and reconciled in the annual withholding statement. Late deposit attracts interest and fees; understated TDS creates employer liability for the shortfall.
Gratuity, leave & overtime breaches
The Labour Act 2017 mandates 8.33% monthly gratuity, home leave of one day per twenty worked, 12 sick days, and overtime at 150%. Treating gratuity as a discretionary exit payment or mistracking leave accrual creates unfunded liabilities and labour claims.
The three types of providers who struggle with Nepal
Global Aggregator Platforms
Platforms like Deel, Remote, and Rippling operate through a partner network in Nepal – they don’t own the entity, don’t directly manage SSF enrolment, and don’t control the compliance relationship. When the Finance Act changes a slab, the instruction travels: platform → partner → your payroll. Each handoff introduces delay and interpretation risk.
- ×No direct IRD / SSF relationship – third-party intermediary handles filings
- ×SSF 31% base and enrolment left to partner discretion
- ×1% SST waiver for SSF members applied inconsistently
- ×Regulatory updates filtered through partner SLAs, not live
Large Global Payroll Incumbents
ADP, Ceridian, and similar incumbents have Nepal coverage – in name. In practice, their South-Asia coverage is often delivered through regional partners or legacy systems that weren’t built for Nepal’s SSF 31% architecture, the individual-versus-couple slab split, or the Bikram Sambat fiscal calendar.
- ×SSF split hardcoded – not dynamically updated each Finance Act
- ×Couple vs individual slab thresholds handled manually
- ×No gratuity accrual engine tied to SSF 8.33%
- ×Long implementation timelines – Nepal not a core market
Local Nepali Firms
Local Nepali accounting and audit firms know the market – but they can’t scale with you. No payroll technology platform, no HRIS integration, no multi-country consolidation, and no data security certifications that multinationals require. Fine for 20 employees. Inadequate at 200.
- ×No proprietary payroll technology – manual spreadsheet-based processing
- ×No HCM connector – Workday, SAP, Oracle feeds require custom work
- ×No data security certifications (SOC 1/2, ISO 27701, BCR)
- ×No APAC consolidation – cannot report across Nepal + other entities
The only provider that closes every gap
Mercans is the only Nepal payroll provider that combines a proprietary payroll technology stack, full-time in-country compliance teams, direct authority relationships, and enterprise-grade data security – simultaneously, on one contract, with no intermediaries.
The only engine built for Nepal’s actual payroll architecture
G2N Nova™ is the world’s only API-first gross-to-net payroll engine. It natively models Nepal’s SSF at 31% of basic salary as distinct scheme layers, runs income tax on the individual and couple slabs, applies the 1% SST waiver for SSF members, tracks gratuity at 8.33%, and auto-generates SSF, E-TDS, and annual return outputs. This isn’t configuration. It’s engineering.
Full-time Nepal team – not a partner you phone when things break
Mercans employs full-time payroll and compliance professionals in Nepal. They maintain active relationships with the Inland Revenue Department, the Social Security Fund, and the Ministry of Labour – not through a contact directory, but through ongoing regulatory engagement. When the Finance Act revises a slab, when SSF updates a scheme rate, when the labour authority issues guidance – we know before it reaches your inbox.
The security posture multinationals require – and Nepal’s IPA now mandates
Nepal’s Individual Privacy Act 2075 (2018) requires entities processing personal data – including payroll data – to maintain documented consent and protection controls. Mercans holds BCR approval, ISO 27701 certification, SOC 1 & 2 certifications, and ISO 27017/27018 – the only payroll provider in the region with this complete certification stack. Zero security breaches since inception.
Where Mercans wins on every Nepal-specific capability
Each row is a Nepal-specific capability. Each cell shows native coverage as a fill bar – full = native in-platform, half = partial / manual workaround, empty = gap.
Nepal Capability Coverage · 10 dimensions
ER 20% + EE 11%
NPR 500k / 600k first band
monthly via SSF
mid-Jul FY · BS deadlines
Workday · SAP · Oracle
Every rate. Every cap. Every obligation.
Nepal payroll operates on exact numbers with hard deadlines across the IRD, SSF, and Ministry of Labour. Mercans builds every figure below into G2N Nova™ and monitors them proactively – so you’re never discovering a rate change from a penalty notice.
Nepal · Rate & Compliance Dashboard
Live 2025–26SSF Is 31% on Basic Salary – Split Across Four Schemes
The SSF combines employer 20% and employee 11% on basic salary. It allocates old-age protection (provident fund + gratuity) 28.33%, medical/health/maternity 1%, accident & disability 1.40%, and dependent family 0.27%. Contributing on gross, or on an understated basic, misstates every scheme. Mercans’ G2N Nova™ models the 31% base and scheme split natively.
→ 31% basic-salary base and scheme split in G2N Nova™Income Tax Slabs Differ by Marital Status
Individuals get a 1% first band to NPR 500,000; couples electing joint assessment get NPR 600,000. Then 10%, 20%, and 30% bands apply, with a 36% effective rate above NPR 2,000,000 and 39% above NPR 5,000,000 via surcharges. The 1% band is waived for SSF contributors. Mercans selects the correct table per employee.
→ Dual individual / couple slab tables · SST waiver logicGratuity and Leave Accrue Under the Labour Act 2017
Gratuity is an 8.33% monthly employer accrual through the SSF, home leave accrues at one day per twenty worked (cap 90 days), and sick leave at 12 days a year (cap 45 days). Overtime is paid at 150% within a 24-hour weekly ceiling. These are accruing liabilities, not figures discovered at exit.
→ Scenario-specific gratuity and leave accrual in HR Blizz™IPA 2018 Is a Payroll Processor Obligation
Nepal’s Individual Privacy Act 2075 (2018) places obligations on entities that process personal data, including payroll providers, to maintain documented consent and protection controls. Non-compliant processors create direct liability for the employers they serve. Mercans ships IPA-compliant processor agreements as standard.
→ BCR · ISO 27701 · IPA agreements standardRun a Nepal payroll. Right here, right now.
Switch worker type. Move the slider. Every number you see is the same calculation G2N Nova™ runs in production – SSF at 31% of basic salary, income tax on the progressive slabs with the SST waiver, and true cost of employment exposed live.
Nepal Payroll Sample · Live
G2N Nova™ engineEight things only Nepal experts know to handle
These are the compliance details that don’t appear in standard payroll setup guides – but appear in every IRD reconciliation, SSF assessment, and labour inspection we’ve encountered in Nepal over 15 years.
SSF Is 31% of Basic Salary, Not Gross
The Social Security Fund is employer 20% plus employee 11% – a combined 31% – calculated on basic salary, not gross. It replaces the old EPF and gratuity funds for enrolled employers. Contributing on the wrong base or skipping enrolment is the single most common Nepal contribution error, and the SSF assesses shortfalls retroactively.
The 1% Social Security Tax Is Waived for SSF Members
The lowest income band carries a 1% social security tax, but it is waived for employees contributing to the SSF, for pensioners, and for sole proprietors. Charging it to SSF members over-withholds; omitting it for non-members under-withholds. The distinction must be driven off SSF enrolment status per employee.
Slabs Differ for Individuals and Couples
A single person’s 1% band covers the first NPR 500,000; a married couple electing joint assessment gets NPR 600,000. Bands then run 10%, 20%, 30%, with a 36% effective rate above NPR 2,000,000 and 39% above NPR 5,000,000 via surcharges. Marital election changes the whole computation.
Gratuity Accrues Monthly at 8.33% Through the SSF
Under the Labour Act 2017 and the SSF, gratuity is funded by an 8.33% monthly employer contribution on basic salary – not a lump sum calculated at exit. For enrolled employers it flows through the SSF old-age scheme. Treating it as a discretionary termination payment creates an unfunded liability.
TDS Is Deposited Monthly, Reconciled Annually
Salary tax is deducted at source and deposited to the IRD within 25 days of each Nepali month-end, then reconciled through the annual income tax return and withholding statement. E-TDS filing is mandatory. Late deposit attracts interest and fees; understated TDS becomes an employer liability.
Payroll Runs on the Bikram Sambat Calendar
Nepal’s fiscal year runs mid-July to mid-July (Shrawan to Ashad), and every statutory deadline is set in Bikram Sambat months roughly two months ahead of the Gregorian date. Payroll periods, tax years, and filing dates must be mapped to the BS calendar, not the Gregorian one.
Home and Sick Leave Accrue and Encash
Home leave accrues at one day per twenty days worked (accumulating to 90 days), and sick leave at 12 days a year (accumulating to 45 days). Amounts above the caps must be encashed annually. Unused statutory leave and its encashment feed directly into final settlement calculations.
Foreign Workers Need Permits and Source-Based Tax
Expatriate staff require a work permit and labour approval and are taxed on Nepal-source employment income at the same slabs, subject to treaty relief. SSF enrolment for foreign nationals depends on the engagement. Misreading permit, tax, and SSF interaction creates both over-withholding and contribution gaps.
One workforce. Two entirely different compliance tracks.
Permanent employees on full SSF, gratuity, and leave coverage vs. fixed-term, casual, and foreign workers on limited-duration and permit-driven obligations requires two distinct compliance frameworks, two sets of termination rules, and two different separation entitlements. Mercans runs both simultaneously on every pay cycle.
Parallel Compliance Engines
SSF applies from Day 1 on basic salary. Employee 11% + employer 20% = 31% to the SSF, covering provident fund, gratuity, medical, accident, and dependent schemes. Enrolment is mandatory before the first payroll for a contributing employer.
Income tax on individual or couple slabs. Progressive 1% to 39% bands on annual income, with the 1% first band waived because the employee contributes to the SSF. Marital election changes the thresholds.
Gratuity accrues monthly, not at exit. The 8.33% employer gratuity contribution flows through the SSF old-age scheme every month – an accruing, funded liability tracked continuously rather than settled as a lump sum on separation.
Home and sick leave are statutory. Home leave at one day per twenty worked and 12 sick days a year, with 90- and 45-day accrual caps and annual encashment of the excess – all feeding payroll and final settlement.
Foreign workers need permits and source-based tax. Expatriate staff require a work permit and labour approval and are taxed on Nepal-source employment income at the same slabs, subject to treaty relief. SSF enrolment turns on the engagement, not an automatic inclusion.
Same tax and contribution treatment where enrolled. Fixed-term and casual staff who are SSF-enrolled attract the full 31% contribution and identical income tax – no reduced rates. The base remains basic salary.
Casual and part-time work is time-tracked. Daily and hourly minimum wages (NPR 754 / NPR 101) and overtime at 150% within the 24-hour weekly ceiling apply. Underpayment against the statutory floor triggers labour claims.
Misclassification is a live audit trigger. Engaging de facto employees as contractors to avoid SSF and TDS is reclassified retroactively, with back-contributions, back-withholding, interest, and fees assessed on the full period.
Every obligation. Every authority. Mercans owns the calendar.
Nepal compliance runs across the IRD, the Social Security Fund, and the Ministry of Labour on monthly and annual cadences set in the Bikram Sambat calendar. Mercans’ managed payroll absorbs every filing as standard scope – you don’t track deadlines. We do.
SSF Contribution
Employer 20% + employee 11% of basic salary, remitted to the Social Security Fund within 15 days of the Nepali month-end. Contributing on the wrong base or missing enrolment triggers retroactive assessment with interest and blocks scheme entitlements.
TDS Deposit (E-TDS)
Salary tax deducted at source and deposited to the IRD within 25 days of each Nepali month-end, with an E-TDS return. Computed on the progressive slabs with the 1% SST band waived for SSF members. Late deposit attracts interest and fees.
Annual Income Tax Return (D-03)
Annual income tax return filed with the IRD by the end of Ashwin (roughly mid-October), three months after the mid-July fiscal year-end. Reconciled against monthly TDS deposits. Discrepancies trigger assessment and penalty interest.
Annual Withholding Statement (D-04)
Comprehensive annual statement of salary withholding per employee, reconciling the year’s monthly E-TDS deposits. The primary audit baseline for salary tax – discrepancies trigger retrospective assessment.
Gratuity & Final Settlement
Terminal settlement releasing accrued SSF gratuity (8.33% monthly), plus leave encashment above the caps and notice adjustment. Must reflect accrued, funded liability – not a figure freshly calculated at separation.
Gratuity Accrual Tracking
Continuous accrual of the 8.33% employer gratuity through the SSF old-age scheme each pay cycle on basic salary and completed service. Required so exit settlements are funded and provisioned, not discovered at separation.
Leave & Overtime Tracking
Running calculation of home leave at one day per twenty worked and 12 sick days a year, with 90- and 45-day caps and annual encashment, plus overtime at 150% within the 24-hour weekly ceiling. Feeds payroll and final settlement.
Bonus & Minimum Wage Compliance
Bonus of 10% of net profit distributed under the Bonus Act, and continuous checks against the NPR 19,550 monthly minimum wage (NPR 754 daily / NPR 101 hourly). Non-compliance triggers labour claims and penalty exposure.
Nepal is one market. Mercans covers all of South Asia.
For companies running payroll across multiple South Asian states, complexity multiplies – not adds. Each country runs its own tax authority, social insurance body, and filing mandate. Mercans covers all major markets on a single platform with country-specific compliance engines running in parallel.
covered
1 contract
consolidation
South Asia
Every filing. Every format. Submission-ready.
Mercans generates the exact file types that the IRD, Social Security Fund, and Ministry of Labour expect to receive – not formatted summaries that need reformatting before you can submit them.
