Payroll compliance for Nepali restaurants: SSF, TDS, and payslips
Payroll compliance isn't just IRD billing — SSF and TDS apply the moment you put staff on payroll.
Restaurants in Nepal with staff on payroll must register with the Social Security Fund (SSF) and contribute 31% of basic salary in total — 20% from the employer (provident fund, gratuity, and an additional contribution) and 11% from the employee (provident fund and a 1% social security tax), deposited by the 15th of every Nepali month. On top of SSF, employers withhold Tax Deducted at Source (TDS) from salary based on the employee's progressive income tax slab, not a flat rate. Payslips need to show both clearly and reconcile with what you deposit and report — get either wrong and your payroll numbers won't match your filings.
SSF: what you owe, and who pays what
The Social Security Fund contribution is 31% of basic salary, split 20% employer and 11% employee. The employer's 20% breaks into 10% provident fund, 8.33% gratuity, and a 1.67% additional contribution; the employee's 11% breaks into 10% provident fund and a 1% social security tax. It's deposited by the 15th of every Nepali month — miss that and you're carrying a compliance gap, not just a bookkeeping one.
There's a salary ceiling SSF contributions apply against, and it's revised periodically (it moved to Rs. 350,000/month for FY 2082/83) — don't assume last year's number still holds; confirm the current ceiling before running payroll for a new fiscal year.
TDS on salary: not a flat rate
Tax Deducted at Source on salary follows Nepal's progressive income tax slabs, not a single percentage — the employer estimates the employee's annual taxable income, applies the applicable slabs, and withholds roughly one-twelfth of the annual liability each month. Two things regularly get missed: the 1% social security tax on the first tax band doesn't apply to employees already contributing to SSF (they're exempt from that specific 1%), and female employees get a rebate on their total income tax liability. Slabs and thresholds are reviewed in the national budget most fiscal years, so this is a number to reconfirm annually, not set once.
Payslips and payroll records that actually reconcile
A compliant payslip shows gross salary, the SSF employee deduction, TDS withheld, and net pay — and those figures need to tie back to what you actually deposited to SSF and reported for TDS, not just what a spreadsheet formula calculated in isolation. Payroll also has to land in your P&L as a labour cost exactly once; running it separately from your expense tracking is the most common way restaurants either double-count labour cost or lose it entirely from the P&L.
This is where manual payroll (a spreadsheet, or a notebook) tends to fail quietly: a missed 15th-of-the-month SSF deposit, a TDS estimate that's never updated when someone gets a raise, or a payslip that doesn't match either. None of these show up until an audit or a reconciliation forces the question.
How software helps
Vaansa's payroll module runs pay cycles for salaried and hourly staff, handles allowances and deductions, calculates statutory SSF, TDS and PAN, and generates payslips — then posts each pay run to your P&L as labour cost, counted once. Attendance (clock-in/out, hours, leave) feeds straight into the pay run instead of being re-entered by hand, which is usually where the SSF-deposit-vs-payslip mismatch starts.
FAQ
What is the SSF contribution rate in Nepal?
31% of basic salary total — 20% from the employer (10% provident fund, 8.33% gratuity, 1.67% additional contribution) and 11% from the employee (10% provident fund, 1% social security tax), deposited by the 15th of every Nepali month.
Is TDS on salary a fixed percentage in Nepal?
No. TDS on salary follows Nepal's progressive income tax slabs based on the employee's estimated annual income — the employer withholds roughly one-twelfth of the estimated annual tax liability each month, not a flat rate.
Do employees pay the 1% social security tax if they're already in SSF?
No — employees contributing to the Social Security Fund are exempt from the separate 1% social security tax that otherwise applies to the first income tax band.