Payroll
Monthly payroll compliance checklist for Nepali employers
What has to happen every month, what has to happen once a year, and the records that make an audit straightforward rather than painful.
Updated August 2026
Payroll compliance in Nepal is less about difficult calculations than about doing a consistent set of things every month and keeping the evidence. This is the working checklist.
Every payroll month
- 1Confirm the employee master is current — joiners, leavers, grade changes and salary revisions applied before the run.
- 2Verify attendance and approved leave for the period, since unpaid leave and overtime both change gross pay.
- 3Run payroll and check the statutory lines: employee and employer retirement contributions on basic, and TDS derived from the annual projection.
- 4Reconcile the contribution total against the sum of both shares across enrolled staff.
- 5Deposit withheld TDS with the Inland Revenue Department within the statutory window.
- 6Remit contributions to the Fund and file the contribution schedule.
- 7Issue payslips showing gross, each deduction, and net.
- 8Archive the run — the register, the statutory schedules and the bank file — so the month can be reproduced.
Once a fiscal year
- Rebuild annual income projections at the start of the year, including expected festival bonus.
- Collect employee declarations for CIT, life insurance and health insurance, with supporting evidence.
- Confirm taxpayer circumstances affecting the rebate and the wider exemption band.
- Reconcile total TDS withheld against total deposited, per employee and in aggregate.
- Issue annual withholding statements so employees can file their own returns.
- Recheck rates and ceilings against the current Finance Act before the first run of the new year.
Records worth keeping
| Record | Why it is asked for |
|---|---|
| Payroll register per month | Reconciles gross, deductions and net across all staff |
| Contribution schedules | Evidence that both shares were computed and remitted |
| TDS deposit receipts | Evidence the withheld tax reached the IRD |
| Employee declarations | Support for insurance and CIT deductions claimed |
| Attendance and leave records | Support for any pay affected by absence or overtime |
| Change log on salary and deductions | Shows who changed what and when |
Where this usually goes wrong
- Computing TDS monthly rather than annually, so the year does not reconcile.
- Applying the retirement ceiling separately to SSF and CIT instead of jointly, over-claiming relief.
- Resetting annual accumulators on the Gregorian year rather than the BS fiscal year.
- Loading a festival bonus’s entire tax onto the month it is paid.
- Keeping salary structures in a spreadsheet that diverges from what payroll actually ran.
Frequently asked questions
What are the most common payroll compliance mistakes in Nepal?
Computing TDS on a monthly rather than annual basis, applying the retirement deduction ceiling separately to each contribution type instead of jointly, and resetting annual accumulators on the Gregorian year instead of the Bikram Sambat fiscal year.
What records should we keep for a payroll audit?
The monthly payroll register, contribution schedules, TDS deposit receipts, employee declarations supporting claimed deductions, attendance and leave records, and a change log covering salary and deduction changes.