Payroll Accounting in Nepal: Process, Compliance, and Smarter Practices

Author : Hajir hr | Published On : 02 Nov 2026

Payroll accounting in Nepal goes well beyond paying salaries on time. It means recording every rupee paid to employees, along with each deduction, contribution, and tax attached to that payment, so your books stay accurate and audit-ready. This guide from Hajir HRM explains how finance and HR teams can build a clear, repeatable payroll process that fits Nepal’s rules.

The article starts with why structure matters, including the Shrawan-based fiscal year, and then breaks down the core parts of a Nepali salary: basic pay, allowances, overtime, incentives, and festival bonuses. It then explains statutory deductions in plain language. You’ll learn how Social Security Fund contributions work for employees and employers, how tax deducted at source on salary is calculated and deposited with the Inland Revenue Department by the 25th of the following month, and how CIT contributions should be recorded.

For accountants, the guide includes a journal entry table covering salary expense, SSF expense, and the SSF, TDS, CIT, and salary payable accounts, along with how payments clear each liability. It also lays out a monthly payroll workflow, from verifying attendance and leave to approval, payment, and timely filing.

The final sections cover common payroll accounting mistakes, such as outdated tax bands, missed joiners, wrong SSF base amounts, and late deposits, plus practical ways to prevent them. It closes with how payroll software reduces errors, plus FAQs. Whether you run a small business or manage a large team, this guide helps you protect compliance, save time, and earn employee trust.