Social security tax is the 1% income tax on the first slab of a resident individual's income — Rs 10 lakh from FY 2083/84. It is not charged on pension income, on people who contribute to the SSF or a pension fund, or on sole proprietorship income.
Who does not pay it
The Act says the 1% is not levied on:
| Case | 1% on first slab? |
|---|---|
| Pension income | No |
| A person contributing to a pension fund | No |
| A person contributing to the Social Security Fund (SSF) | No |
| Income of a sole proprietorship firm | No |
| Everyone else | Yes |
What it means in rupees
Above the first slab the difference stays the same: an SSF contributor pays Rs 10,000 less tax than someone who pays the 1% on the full first slab.
For payroll
Employers should check each employee's SSF or pension-fund status before withholding tax, because it changes the tax on the first Rs 10 lakh. See remuneration (salary) tax in Nepal for monthly examples.
Sources
- Institute of Chartered Accountants of Nepal (ICAN), Highlights of Federal Budget of Nepal FY 2083/84 — amendments to the Income Tax Act, 2058 and the Value Added Tax Act, 2052.
- Inland Revenue Department, ird.gov.np — Acts, rules, notices and the taxpayer portal.
Last checked: 15 September 2026 (Bhadra 30, 2083). Tax law changes with each Finance Act — confirm your own situation with the Inland Revenue Department or a registered tax professional.
Social security tax vs the SSF contribution
They are different things:
Joining the SSF removes the 1% tax, and contributions within the legal limit can also be deducted from taxable income.