Cost of an employee in Nepal (2026)
What an employee really costs an employer in Nepal: gross salary plus mandatory employer social contributions.
On a gross salary of NPR 125,000 per month in Nepal, an employer pays about NPR 150,000 in total once mandatory employer social contributions of 20% on top of the gross are included.
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How salary is taxed in Nepal
Income tax in Nepal is progressive: marginal rates rise from 1% to 39% as income grows.
Employees also pay social contributions of around 11% of gross salary.
The standard VAT rate is 13%.
| Annual taxable income | Tax rate |
|---|---|
| Up to NPR 500,000 | 1% |
| Up to NPR 700,000 | 10% |
| Up to NPR 1,000,000 | 20% |
| Up to NPR 2,000,000 | 30% |
| Up to NPR 5,000,000 | 36% |
| NPR 5,000,000 and above | 39% |
Frequently asked questions
What does it cost to employ someone in Nepal?
On top of the gross salary, an employer in Nepal pays mandatory social contributions. The total cost of employment is the gross salary plus those employer contributions.
Are employer contributions the same as salary deductions?
No. Employer contributions are paid by the company in addition to the gross salary, while employee deductions (income tax and social contributions) are taken out of the gross to leave the net take-home pay.
Employer-contribution rates are approximate and may be capped or vary by region and sector.
Approximate 2026 estimate. Simplified model, verify before relying on it. Not tax advice.
Rates updated June 2026