Tax & TDS

SSF vs EPF vs CIT: which retirement scheme applies to your payroll

Three schemes, three different rate structures, one shared tax-deduction ceiling. Getting the interaction wrong is what causes over-claimed relief.

Updated August 2026

Nepali payroll deals with up to three retirement vehicles at once, and they are frequently confused with each other. The Social Security Fund and the Employees Provident Fund are alternatives — an employer runs one or the other. The Citizen Investment Trust sits alongside either as a voluntary addition.

For payroll the practical questions are: what rate applies, who pays it, and how much of it can be deducted for tax.

The three schemes side by side

Contribution structure
Scheme	Employee	Employer	Base	Nature
Social Security Fund (SSF)	11%	20%	Basic salary	Mandatory where the employer is enrolled
Employees Provident Fund (EPF)	10%	10%	Basic salary	The alternative approved fund
Citizen Investment Trust (CIT)	Voluntary amount	None	Chosen by the employee	Voluntary, alongside SSF or EPF

One ceiling, shared between them

This is the part that most often goes wrong. The employee’s retirement contributions are deductible from annual salary income, but there is a single combined ceiling covering the SSF or EPF employee share and the CIT contribution together.

The ceiling is the lower of NPR 5,00,000 or one-third of annual salary income. Deducting the SSF contribution and the CIT contribution against separate limits over-claims relief.

The ceiling applied — employee on NPR 1,00,000 gross, NPR 40,000 basic, SSF
Item	Amount
Annual salary income	NPR 12,60,000
One-third of annual salary income	NPR 4,20,000
Absolute ceiling	NPR 5,00,000
Ceiling that applies (the lower)	NPR 4,20,000
SSF employee contribution for the year	NPR 52,800
CIT contribution	NPR 1,20,000
Combined contributions	NPR 1,72,800
Deductible (within ceiling)	NPR 1,72,800

Effect on take-home pay

CIT is worth understanding carefully because its effect on take-home is often reported backwards. It reduces taxable income, which lowers TDS — but the contribution itself is also withheld from pay, and the withholding is larger than the tax saving.

On a 10% marginal rate, contributing NPR 10,000 a month to CIT withholds NPR 10,000 and saves roughly NPR 1,000 of tax. Take-home falls by about NPR 9,000. The money is not lost — it is in the employee’s CIT account — but it is not accessible until they leave the employer.

What this means for payroll configuration

Set the scheme per employer, not per employee — an organisation runs SSF or EPF, not a mixture.
Make CIT a per-employee amount, since it is voluntary and varies.
Apply the combined ceiling once, across both contribution types together.
Deduct the full contribution from take-home while deducting only the capped amount for tax.
Flag enrolled employees so the 1% first-band waiver is applied.

Frequently asked questions

Can an employee be in both SSF and EPF?

In practice an employer operates one approved fund. CIT is the scheme that runs alongside, as a voluntary employee contribution on top of whichever fund the employer uses.

Does CIT increase or decrease take-home pay?

It decreases it. The contribution is withheld from salary in full, and the tax saving it generates is smaller than the amount withheld — the difference is the employee’s marginal rate. The balance accrues to the employee and becomes accessible after they leave the employer.