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Deduction On Salary | What are the deduction made on salary?

Salary is distributed to the employee of a government office is against service rendered by them. The government of Nepal determines the amount of salary to each level of employee. The amount of salary is distributed to the employee after making a deduction of provident fund, Income Tax, provident fund loan, and citizen investment fund.

Salary on pocket

1. Employee's Provident Fund

According to the prevailing financial rules and regulations, the amount equivalent to 10% of the salary is required to deduct from salary while the amount of salary is distributed. The government also contributes the same amount of found and deposits in the account of the employee. The government provides this facility to permanent employees only. Such accumulated provident funds can be refunded after the retirement of the employee. It can be withdrawn as a loan as per the requirement of the employee. The provident fund office collects the amount of provident funds and mobilizes it in the productive sectors.

2. Income tax

The employee should pay the amount of tax to the government according to the financial rules and regulations of the country. The amount of income tax should be deducted at source by the government office from the taxable income of an employee while distributing the amount of salary. The Income-Tax act has given a certain exemption limit of income for tax purposes. And the employee has to pay income tax on the income over the exemption limit.

3. Provident fund loan

The employee of the government offices deposits their provident fund in the account of the provident fund office. They are given for facility to take a loan out of their provident fund deposit. Such a loan can be repaid on an installment basis by making with direction from their monthly salary.

4. Citizen investment fund

It is a voluntary investment, which can be made by interested employees. The government establishes the office of the citizen investment fund. If the employees of a government office make an investment in the citizen investment fund, the office makes a deduction on the monthly salary. While distributing salaries such an amount is deducted from the salary and is deposited in the office of a citizen investment fund.