The short version
- Employee contribution is 11% of Basic remuneration.
- Employer contribution is 20% of Basic remuneration.
- The combined 31% is not deducted entirely from the employee.
- Employer SSF is employer cost and can also enter assessable-remuneration and retirement-deduction calculations.
What the 31% actually means
The phrase “SSF 31%” is often misunderstood as a 31% deduction from an employee’s salary. In the standard formal-sector structure, 11% is the employee contribution and 20% is the employer contribution, both calculated on Basic remuneration. The payslip should therefore show the employee deduction and employer-funded amount separately.
If Basic salary is NPR 50,000, the employee contribution is NPR 5,500 and the employer contribution is NPR 10,000. The total deposited is NPR 15,500. Only NPR 5,500 is deducted from the employee’s cash salary for this contribution.
Connection with Labour Act contributions
Labour Act Section 52 provides for a 10% deduction from Basic remuneration for provident fund with an equal amount added by the employer. Section 53 provides an employer gratuity contribution equal to 8.33% of Basic remuneration. Medical and accident protection are addressed in Sections 54 and 55, while Section 57 addresses overlap where benefits are covered through a social-security scheme.
The SSF structure packages several social-security components together. A payroll explanation should identify the actual selected scheme instead of simultaneously applying SSF and duplicating the same statutory provident-fund or gratuity obligation.
How SSF appears in salary tax
Employer SSF is not ordinary cash paid into the employee’s bank account, but it is relevant to the remuneration and approved-retirement calculation. Employee and employer SSF together form part of the contribution claimed subject to the applicable annual limitation. The first remuneration band may receive SSF-specific treatment only when the fiscal-year rule and membership conditions support it.
An employee who is not actually enrolled should not select SSF merely to obtain a lower estimate. Payroll records, deposits and the employee’s scheme status should agree with the working paper.
What a clear payslip should show
A good payslip separates gross cash earnings, employee SSF, salary TDS and other employee deductions from employer-funded SSF. Employer SSF belongs in an employer contribution or employer cost section, not among deductions that reduce net salary.
When an employment offer is expressed as total employer cost, confirm whether the employer SSF is already inside the package. Adding it again produces an overstated employer cost; deducting the full 31% from cash salary understates take-home pay.
Where to check the details
For an important payroll, filing or financial decision, open the source itself and check whether anything has changed since this guide was updated.
- Labour Act 2074 — Nepal Law Commission
Sections 52–57 on provident fund, gratuity and insurance.
- Social Security Fund laws and procedures
Official SSF source library.