How to Calculate CIT Contribution in Nepal (With a Worked Example)

CIT (Citizen Investment Trust, or Nagarik Lagani Kosh) is Nepal's voluntary retirement savings scheme — unlike SSF, no employer is legally required to offer it, but where it exists, the calculation follows a simple, consistent pattern.

The formula

CIT contribution is typically calculated as:

• Employee: 10% of basic salary, deducted from pay
• Employer: 10% matching contribution, where the employer offers a matched scheme

The exact matching percentage is set by each employer's own CIT scheme agreement — 10%/10% is the most common structure, but it is not fixed by law the way SSF's 11%/20% split is.

Worked example

Take the same NPR 40,000/month basic salary:

• Employee contribution: NPR 40,000 × 10% = NPR 4,000, deducted from pay
• Employer contribution: NPR 40,000 × 10% = NPR 4,000, matched by the business
• Total monthly CIT deposit: NPR 8,000

The tax deduction benefit

CIT contributions are deductible from taxable income up to NPR 3,00,000 per year. For an employee in a higher tax bracket, contributing the full annual limit can mean real tax savings on top of the retirement fund itself — this is the main reason CIT is still offered voluntarily even where SSF already covers the mandatory side.

CIT vs SSF: the calculation doesn't overlap

CIT is not a substitute for SSF where SSF registration is mandatory — it is typically an additional, voluntary layer on top. An employer who has migrated to SSF does not need a separate PF or gratuity scheme, but may still offer CIT as a supplementary benefit.

Why this is worth automating

Where CIT is part of an employee's compensation structure, it is one more monthly deduction and one more employer-side contribution to track accurately alongside SSF and TDS — exactly the kind of multi-deduction payroll run Hajir Khata is built to calculate without a separate spreadsheet per scheme.

CIT scheme terms, contribution percentages, and tax deduction limits are set by Citizen Investment Trust and the Inland Revenue Department and can change — always confirm current terms against the latest official notice before relying on any figure for compliance purposes.