Registering a private limited company at the Office of the Company Registrar is the end of one process and the start of another. The moment you put a first name on a payroll, a second body of law applies to you: the Labour Act 2074, the Labour Rules 2075, the Contribution Based Social Security Act 2074, the Income Tax Act 2058 and the Bonus Act 2030. None of it is triggered by your PAN certificate. All of it is triggered by hiring.
This guide is the checklist a newly registered company needs for FY 2083/84, in the order the obligations actually fall due, with the provision behind each one so you can check it yourself.
Key Takeaways
An employment contract is compulsory from day one. Section 163(1)(d) of the Labour Act 2074 allows a fine of NPR 10,000 per worker, up to NPR 500,000, for engaging anyone without one.
Social Security Fund registration is two steps, not one: a registration number for the company, then a social security number for each employee within three months of hiring.
Two deadlines repeat every month and they are not the same date. TDS is due within 15 days of month end, SSF contributions within 25 days.
The SSF contribution is 31% of basic salary, split 11% employee and 20% employer.
FY 2083/84 merged the single and couple tax tables into one schedule for all resident natural persons and cut the top marginal rate from 39% to 29%.
Why company registration and employer compliance are two different things
A newly registered company that has not hired anyone has a short list of duties: PAN or VAT, an office, a bank account, annual returns to the Company Registrar. The moment the first employment relation exists, the list changes shape entirely.
The distinction matters because the penalties for the second list are per worker and per occurrence, not per company. A five-person startup that skipped written contracts is not exposed to one fine. It is exposed to five.
The other reason founders are caught out is timing. Company registration is a project with an end date. Employer compliance is a monthly cycle that starts in the month you hire and never stops. Nothing in the registration process tells you the cycle has begun.
Step 1: Put every employee on a written employment contract
Section 11(1) of the Labour Act 2074 prohibits engaging any person in work without concluding an employment contract. There is one exemption, casual employment, and it is narrow.
The penalty is not nominal. Section 163(1)(d) allows the Labour Office to fine the employer NPR 10,000 for each worker, up to a ceiling of NPR 500,000, and to order the contracts to be issued anyway.
What the contract has to fix
At minimum, put in writing:
The type of employment (regular, work-based, time-bound, casual, part-time)
The position, and the place of work
Remuneration, its components, and the payment cycle
Working hours and the weekly holiday
Leave entitlements
Notice period on either side
The probation term, if any
The mistake almost every new company makes
Appointment letters get issued and contracts do not. An appointment letter that both parties have signed and that fixes the terms above will usually do the job. A one-paragraph letter announcing a start date and a salary will not, because it settles none of the terms the law expects the contract to settle.
Fix this before you hire the second person, not after the tenth. Backfilling contracts for a team of twenty is a week of work and an awkward conversation with every one of them.
Step 2: Register with the Social Security Fund, twice
This is the single most common gap in newly registered companies, and it is a gap with interest attached.
Registration with the Social Security Fund is two separate acts:
The employer is listed. The company gets a registration number under Section 19 of the Contribution Based Social Security Act 2074.
Each employee is enlisted. Every worker is separately issued their own social security number under Sections 20 and 41.
Section 22(1) treats an employer and a contributor as listed only once both numbers exist. A company that stopped after step one appears in the Fund's records as registered and non-contributing, which is exactly the state the annual labour audit form asks about in two separate questions.
The three-month clock
Section 20(1) gives a listed employer three months from the establishment of the employment relation to enlist a new joiner. This is a rolling obligation, not a one-time setup task. Every hire restarts it.
What happens when you skip it
Three things, in escalating order:
Under Section 20(2), the employee can apply to the Fund directly, and the Fund can order the employer to enlist them. You lose control of the timing.
Under Sections 17 and 9, the Fund can order back-contributions from the date the employment relation started, with 10% interest. A year of missed enrolment on a five-person team is not a small bill.
The gap surfaces in your labour audit, where the answer goes on record.
Registration is done through the Fund's portal at sosys.ssf.gov.np.
Step 3: Understand what 31% actually buys
Once enrolled, 31% of each employee's basic salary goes to the Fund every month: 11% withheld from the employee and 20% contributed by the employer. Note that this is assessed on basic salary, not on gross pay, which is why salary structure design matters so much in Nepal.
Section 25 of the Social Security Scheme Operation Procedure 2075 splits that 31% four ways before it lands:
Scheme | Share of basic | What it pays for |
Medical treatment, health and maternity protection | 1.20% | Treatment cost, delivery, fatal disease |
Accident and disability protection | 0.80% | Treatment cost and income replacement |
Dependent family protection | 0.67% | Pension, education grant, funeral expense |
Old-age protection | 28.33% | Pension plan and retirement benefit plan |
The 28.33% is worth reading twice, because it is not a new cost. Section 19(1) of the Procedure states it in terms: that figure is the employer's 10% provident fund plus 8.33% gratuity, being 18.33%, and the worker's 10% provident fund contribution. It is Sections 52(1) and 53(1) of the Labour Act rewritten as a single contribution.
For a company deciding between SSF and the older PF, CIT and gratuity arrangement, that is the number that settles the argument: most of the 31% was already owed under a different name.
To see what this costs on a specific salary before you commit to a structure, NepalHRM publishes a free SSF contribution calculator that breaks any basic figure into the four scheme shares.
Step 4: Set the salary structure with FY 2083/84 tax rules in mind
FY 2083/84 runs from Shrawan 1, 2083 to the end of Ashad 2084, and it brought the largest change to personal income tax in years.
The merged slab table
The separate schedules for single and married assessees were merged into one table for all resident natural persons:
Annual taxable income (NPR) | Rate |
Up to 1,000,000 | 1% |
1,000,001 to 1,500,000 | 10% |
1,500,001 to 2,500,000 | 20% |
2,500,001 to 4,000,000 | 27% |
Above 4,000,000 | 29% |
Two notes on the extremes. The first band is the 1% social security tax, and employees enrolled in the SSF have it waived, because the Fund already covers what it pays for. At the top, the Finance Act presents the rate as 27% plus a 2% surcharge rather than as a flat 29, and the budget summary describes the maximum rate as being cut by ten percentage points from the old 39%.
The ceiling that did not move
The retirement contribution deduction still caps at the lowest of the actual contribution, NPR 500,000, or one third of assessable income. A rate cut in the same year makes it look as though every limit moved. It did not.
A salary tax calculator for FY 2083/84 will apply the merged bands and the SSF waiver to a specific package, which is a faster way to sanity-check an offer letter than working the bands by hand.
Basic versus allowance
Because both SSF and PF are assessed on basic salary, the split between basic and allowance changes your cost. Structure it deliberately and document the policy. Where basic remuneration has not been prescribed, Section 170(1) of the Labour Act deems the fixed minimum remuneration to be the basic, so the floor is not negotiable downward.
Step 5: The two monthly deadlines that never move
Put these in a calendar on the day you hire your first employee.
TDS: within 15 days of month end. Section 90(1) of the Income Tax Act 2058 sets the time limit for the statement, and Section 90(2) requires the tax to be paid to the Department within the same window. Shrawan's deduction is therefore due before the middle of Bhadra.
SSF: within 25 days of month end. Section 4(4) of the Contribution Based Social Security Act 2074, as amended in 2082, sets the deposit deadline for contributions.
Three provisions make TDS a liability worth taking seriously even in a company that pays everyone in full and on time:
Section 90(3) deems tax to have been withheld at the moment it should have been. An employer who paid an employee gross still owes the tax.
Section 90(5) makes the withholding agent and the employee jointly and severally liable where tax was not withheld or not paid over.
Section 119(3) blocks the employer from recovering, from the employee, the interest arising from the employer's own late payment. You can chase the tax. You cannot chase the penalty.
This is also why outsourcing payroll does not outsource the liability. Section 87 places the duty to withhold on the resident employer. A service provider running your payroll is your agent, not the withholding agent.
Step 6: Know which deductions from salary are lawful
Section 38(1) of the Labour Act 2074 is a closed list of nine permitted deductions. It is not a set of examples. If a deduction is not on that list, it is not lawful, however reasonable it sounds and however clearly it is written into your handbook.
The practical consequence for a new company: a fine for lateness is not a lawful salary deduction. Neither is a charge for breakage, unless it fits a listed head. Attendance problems are managed through the disciplinary process the Act provides, not by shaving pay.
Write your bye-laws with that list open in front of you. Rows 23 and 24 of the labour audit form ask not only whether bye-laws were made, but whether they were registered at the Labour Office and distributed to workers, and they ask for the registration number and date.
Step 7: Keep the records before anyone asks for them
Rule 81(3) of the Labour Rules 2075 requires employment records to be retained for five years. That is longer than most startups keep anything, and considerably longer than the average founder keeps a spreadsheet.
The records to keep from month one:
Signed employment contracts, and every amendment
Monthly attendance, including overtime worked and approved
Leave taken, by leave type, per employee
Payslips issued, with the deduction breakdown
Proof of every TDS deposit and every SSF deposit
Registered bye-laws, with the registration number
The reason to start on day one rather than at year end is that most of these cannot be reconstructed later. Attendance in particular is a contemporaneous record or it is nothing. If you are issuing payslips by hand today, a free payslip generator at least gives you a consistent format with the deduction lines already laid out.
Step 8: The annual obligations
Beyond the monthly cycle, four dates matter each year.
When | What | Provision |
Within 15 days of each month ending | TDS statement and deposit | Income Tax Act 2058, s.90(1), s.90(2) |
Within 25 days of each month ending | SSF contribution deposit | CBSS Act 2074, s.4(4) as amended 2082 |
By the end of Poush | Labour audit for the year | Labour Rules 2075, Rule 56(1) |
By the end of Falgun | Bonus distribution | Bonus Act 2030 |
Within 30 days of the year ending | Annual withholding certificate to each employee | Income Tax Act 2058, s.91(3)(b) |
The labour audit
Section 100(1) of the Labour Act requires every enterprise to carry out a labour audit on whether its activities comply with the Act, the Rules and prevailing law, and to prepare a report. Rule 56(1) sets the deadline at the end of Poush each year, carried out either by the enterprise's own managerial-level worker or by another person or institution connected with the labour sector.
Rule 56(2) fixes the format at Schedule 10 and requires the report to be produced to an inspector on request. Rule 56(4) requires a copy to go to the labour relations committee, and to the sector regulator for regulated industries.
Read Schedule 10 early. It is the clearest available statement of what the state expects of you, and it doubles as a to-do list. It asks for headcount by employment type, leave days actually given, whether PF and gratuity were deposited, whether you are registered with the SSF, whether contributions are actually being deposited, and whether bonus has been distributed. Where the answer to a deposit question is no, the form asks you to disclose where the money was used instead. Section 163(2)(d) then allows the Office to recover the amount plus double as damages.
Withholding certificates
For employment income under Section 87, the withholding certificate is annual rather than monthly: due within 30 days of the year ending, under Section 91(3)(b). There is one exception worth remembering. Under Section 91(3), when an employee leaves during the year, their certificate is due when they leave, not at year end.
What this looks like for a five-person company
Take a company that registered in Shrawan 2083 and hired five people in Bhadra on an average basic of NPR 30,000.
SSF, monthly: 31% of NPR 150,000 of combined basic, being NPR 46,500 a month, of which NPR 16,500 is withheld from employees and NPR 30,000 is the employer's own cost. Due by the 25th day after each month ends.
TDS, monthly: whatever the merged slabs produce on each package, deposited with the statement within 15 days.
Enrolment deadline: each of the five had to hold a social security number within three months of joining, so by roughly the end of Mangsir.
First labour audit: end of Poush 2083, on Schedule 10.
First bonus decision: end of Falgun, once the year's profit position is known.
Records: retained until 2088.
The monthly work is not large. The problem is that it is recurring, dated and evidentiary, and those three properties are exactly what a founder running sales, hiring and fundraising at the same time is worst at holding.
How to run this without a full-time HR person
Most companies at this stage do not need an HR department. They need the compliance cycle to run without anyone remembering it.
Three practical suggestions, in order of how much time they save:
Put the calendar in a system, not a head. The two monthly deadlines and the four annual ones should generate a reminder before they are due, not after.
Let the payroll run produce the filing. If your TDS statement, SSF report and payslips are all derived from the same monthly run, the reconciliation problem disappears. If they are three spreadsheets, it does not.
Record attendance and leave contemporaneously. Everything Schedule 10 asks about headcount, leave and overtime is a report if the data exists, and a fortnight of archaeology if it does not.
NepalHRM was built for exactly this stage: Nepali payroll with the FY 2083/84 slabs, SSF and PF contributions calculated on basic, TDS and SSF filing outputs, attendance, leave, and the records the labour audit asks for, in one place. There is a free plan for teams up to ten employees, which covers most companies for their first year.
Readers of eStartup Nepal can start a free NepalHRM account here.
If you would rather work through the numbers first, the free payroll and HR tools need no account at all.
Frequently asked questions
Do I have to register with the Social Security Fund if I only have two employees?
Yes. The obligation in the Contribution Based Social Security Act 2074 attaches to the existence of an employment relation, not to a headcount threshold. Two employees means an employer registration number under Section 19 and a social security number for each of them under Sections 20 and 41.
Can I pay my first few employees on a consultancy agreement instead of hiring them?
Only if the relationship genuinely is one. Where a person works fixed hours, at your place of work, under your direction, using your equipment, a consultancy label does not change what the arrangement is. Section 11(1) then applies, and so does the Section 163(1)(d) fine of NPR 10,000 per worker. Get this wrong at scale and it also creates a retrospective SSF back-contribution exposure under Sections 17 and 9, with 10% interest.
What is the difference between SSF and PF plus gratuity? Do I need both?
They are alternatives, not additions. Section 19(1) of the Social Security Scheme Operation Procedure 2075 builds the SSF old-age scheme out of the employer's 10% provident fund plus 8.33% gratuity plus the worker's 10% provident fund, which is the 28.33% old-age share. A company enrolled in the SSF is discharging Sections 52(1) and 53(1) of the Labour Act through the Fund. Running both is paying twice for one obligation.
My company registered mid-year. When is my first labour audit due?
Rule 56(1) fixes the deadline at the end of Poush each year and does not create an exemption for a first partial year. Plan for the Poush following your first hire, and treat the Schedule 10 form as a gap analysis rather than a report card the first time you complete it.
Can I deduct a fine from an employee's salary for repeated lateness?
No. Section 38(1) of the Labour Act 2074 sets out a closed list of nine permitted deductions from remuneration, and a punitive fine for lateness is not among them. Attendance issues are handled through the disciplinary procedure the Act provides. A deduction outside the list is unlawful even where the employee has agreed to it in writing.
Sources
Labour Act 2074: Sections 11, 38, 52, 53, 100, 163, 170
Labour Rules 2075: Rules 56, 81, Schedule 10
Contribution Based Social Security Act 2074: Sections 4, 9, 17, 19, 20, 22, 41 (as amended 2082)
Social Security Scheme Operation Procedure 2075: Sections 19, 25
Income Tax Act 2058: Sections 87, 90, 91, 119; Schedule 1 as amended by the Finance Act 2083 Bonus Act 2030
Social Security Fund employer portal: sosys.ssf.gov.np
Chief Executive Officer
He is a Semi Qualified Chartered Accountant from the Institute of Chartered Accountants of Nepal with expertise in accounting, taxation, and financial reporting. He is also a Xero Advisor Level Certif...
