How much TDS is deducted from salary in Nepal?
On FY 2083/84 rules a salary of NPR 50,000 a month with no retirement fund has NPR 500 of TDS withheld each month, and NPR 1,00,000 a month has NPR 2,500. TDS is the annual tax divided across the months worked, so it follows the year, not the month.
| Monthly salary | Monthly TDS | If in the SSF | Tax for the year | Effective rate |
|---|---|---|---|---|
| NPR 30,000 | NPR 300 | NPR 0 | NPR 3,600 | 1% |
| NPR 50,000 | NPR 500 | NPR 0 | NPR 6,000 | 1% |
| NPR 75,000 | NPR 750 | NPR 0 | NPR 9,000 | 1% |
| NPR 1,00,000 | NPR 2,500 | NPR 1,007 | NPR 30,000 | 2.5% |
| NPR 1,50,000 | NPR 10,000 | NPR 7,187 | NPR 1,20,000 | 6.67% |
| NPR 2,00,000 | NPR 20,000 | NPR 16,527 | NPR 2,40,000 | 10% |
Every row assumes twelve months on one salary, no taxable allowance, no festival bonus and no insurance relief. Add any of those and the year’s bill moves, which moves the monthly deduction with it — put your own figures into the calculator above rather than reading a row as your answer.
Why the SSF column is lower
What is TDS on salary?
TDS — Tax Deducted at Source — is income tax collected by the payer instead of the taxpayer. On a salary the employer works out the tax due on the whole fiscal year, withholds a slice of it from every payslip, and deposits that slice against the employee's PAN. It is not an extra tax and not a separate rate: it is the same income tax, paid in instalments.
The distinction matters because a great many people believe TDS is a rate — that there is a “TDS rate on salary” the way there is a TDS rate on rent or on a service fee. There is not. For employment income the withholding is whatever the year’s tax works out to, divided by the months. Two colleagues on identical salaries can have different TDS because one joined in Kartik and one has been there since Shrawan, and they will still owe the same tax for the year.
That also explains why nobody can quote your TDS from your salary alone. It needs the whole year: allowances, the festival bonus, which fund you are in, what you put into CIT, and how many months you are paid.
How is TDS on salary calculated in Nepal?
Add up assessable income for the fiscal year — pay, taxable allowances, festival bonus and the employer's PF or SSF contribution. Subtract each relief against its ceiling. Run the remainder through the bands. Apply the resident woman rebate if it is due. Divide the result across the months worked, and that quotient is the monthly TDS.
- Assessable income for the year.Salary, taxable allowances and bonus, plus the employer’s PF or SSF contribution — that contribution is a taxable benefit in your hands, and it is the step most TDS sheets miss.
- Reliefs, each against its own ceiling. PF, SSF and CIT share one ceiling of NPR 5,00,000 a year; CIT only gets the room the mandatory contribution leaves behind. Life insurance up to NPR 40,000, health insurance up to NPR 20,000.
- The bands run on what is left. They are marginal, so a raise never costs more than it pays.
- SSF members skip the 1% band; Provident Fund members do not.
- A resident woman’s computed tax gets a 10% rebate, applied last, before the year is divided into months.
The step-by-step guide works the same sequence through with a full example, and the post on how TDS is worked out follows one payslip from gross to the deduction line.
Why does my TDS change from month to month?
Because tax is assessed on the fiscal year and TDS is only an instalment of it. A raise, a festival bonus, a mid-year joining date or a CIT top-up changes the year's bill, and payroll spreads the new figure across the months that are left — so the months after a change carry more or less than the months before it.
- A raise.The year’s bill goes up, and the increase is recovered over the remaining months rather than the whole twelve — so the first payslip after a raise often deducts more than you expected.
- The festival bonus. Dashain money is assessed with the rest of the year, so it lifts the withholding on every other month too, not only the month it is paid.
- Joining or leaving mid-year. Fewer months of income, and the same bands — so the tax is lower and the instalments are spread over fewer payslips.
- A CIT contribution or an insurance premium declared late. The relief applies to the whole year, and payroll refunds the excess through a smaller deduction in the months that are left.
The calculator above takes a year as a list of pay periods, so a raise in Mangsir or a resignation in Magh needs no averaging by hand — it prices the year as the sequence it actually was and shows what each stretch should withhold.
What does the employer do with the TDS it deducts?
The employer files a withholding statement — the eTDS return — through the Inland Revenue Department's taxpayer portal and deposits the money there, broken down employee by employee against each PAN. That per-PAN split is what lets the tax office credit the withholding to you rather than to your employer.
The return is per employee, which is the part worth understanding as an employee: money deposited without your PAN against it is money the tax office cannot credit to you. That is why a PAN is not optional for salaried staff, and why the TDS certificate your employer issues is the document that proves the year was paid.
Deadlines for the statement and the deposit are set by section 90 of the Income Tax Act as amended, and the Inland Revenue Department publishes the schedule that applies in the current year. Check it there before relying on a date — this page deliberately does not quote one, because a wrong deadline costs a fine.
Running payroll rather than reading a payslip?
How do I check the TDS deducted from my salary?
Three figures on one payslip: gross pay, the retirement contribution, and the tax line. Multiply the tax line by the months you will be paid this year and it should land on the annual figure the calculator above shows. If it does not, the usual cause is an allowance or a bonus payroll has counted and you have not.
- Put your gross monthly salary, allowances and festival bonus into the calculator above, and pick the fund you actually contribute to.
- Set the months worked to the months you will be paid in this fiscal year — not twelve, if you joined after Shrawan.
- Compare the annual tax it shows against your payslip’s tax line multiplied by those months. A gap of a few rupees is rounding; a gap of thousands is an input the two of you disagree on.
- Ask payroll for the withholding figure they filed against your PAN, and check it against your TDS certificate at the year end.
Which TDS this calculator does not cover
This tool computes TDS on employment income only. The Act sets separate withholding rates for rent, service and consultancy fees, dividends, interest, royalties and contract payments, and none of them are calculated here.
Saying so plainly is a better answer than guessing. Those rates change with the Finance Act, they differ by the status of the recipient, and several of them have exceptions that a general calculator would get wrong. For any of them, the Inland Revenue Department publishes the current schedule, and a registered accountant can confirm which line a payment falls under.
What this site does cover, all on the same tested engine: the salary tax calculator, the income tax calculator, take-home to gross, the deductions you can claim and the full slab tables.
Sources
- Income Tax Act 2058
Withholding on employment income, and the statement the payer must file.
- Inland Revenue Department
The taxpayer portal the eTDS return is filed through, and the current deadlines.
- Social Security Fund
Contribution rates, and who the 1% Social Security Tax waiver applies to.