Annual Bonusबोनस
The annual bonus is a share of an enterprise's net profit distributed to its employees under the Bonus Act 2030. Ten percent of net profit is set aside for the purpose, and what remains after distribution goes to welfare funds.
Also called: Bonus Act 2030, profit bonus Nepal, employee bonus Nepal
Key facts
- Set aside
- 10% of net profitAllocated to the bonus pool.
- Eligibility
- Half the year workedEmployees below that threshold do not qualify.
- Individual cap
- A multiple of monthly salarySet by the Act.
- Residual split
- 70% / 30%Enterprise welfare fund, then the National Welfare Fund.
How the pool is formed and shared
A profit-making enterprise allocates ten percent of its net profit for the financial year to a bonus pool. That pool is then distributed among employees who worked at least half the year, according to the formula in the Act.
An individual's bonus is capped as a multiple of their monthly salary, so a very profitable year does not translate into an unbounded payout for any single employee. Whatever is left in the pool after distribution is split: seventy percent to the enterprise's own welfare fund and thirty percent to the National Welfare Fund.
Why it is not a guaranteed payment
The bonus comes out of profit. In a loss-making year there is no pool and therefore no bonus, and that is lawful. This is the practical difference employees most often miss when they compare it with festival expense, which is paid whether or not the company made money.
What HR and finance need in place
- Audited net profit for the fiscal year, since the pool is a percentage of it.
- Service records accurate enough to establish who crossed the half-year threshold, including leavers.
- The salary figures the individual cap is applied against.
- Tax treatment: the bonus is taxable income to the employee in the year it is paid.
Annual Bonus, answered
The enterprise sets aside ten percent of net profit as the bonus pool, and that pool is distributed among eligible employees under the Bonus Act 2030. An individual's share is capped as a multiple of their monthly salary.
Employees who worked at least half the financial year. Those who joined too late in the year to reach that threshold do not qualify for that year's distribution.
No. The bonus is a share of net profit, so a year with no profit produces no pool. Festival expense is separate and is still payable.
- Bonus Act 2030 and its amendments, including the welfare-fund allocation of the residual pool.
This page explains general practice in Nepal. It is not legal or tax advice, and statutory figures are revised from time to time. Check the current Act, rule or notice before acting on it.
Put it into practice
Related terms
- Festival Expenseचाडपर्व खर्चFestival expense is a statutory payment of one month's basic remuneration, made once a year at the festival the employee celebrates. It is the Nepali equivalent of a thirteenth-month salary, and it is an entitlement under the Labour Act 2074 rather than a discretionary bonus.
- Labour Act 2074श्रम ऐन २०७४The Labour Act 2074 is Nepal's principal employment statute, in force since 2074 BS (2017 AD) and applied together with the Labour Rules 2075. It sets employment types, working hours, overtime, leave entitlements, probation and notice, and the funded gratuity and social security model.
- Gross Salaryकुल तलबGross salary is an employee's total earnings for a period before any deduction: basic salary plus every allowance, overtime and taxable benefit. It is the figure most offer letters quote and the one employees compare against.
- TDS (Tax Deducted at Source)स्रोतमा कर कट्टीTDS is income tax withheld by the employer from an employee's salary each month and deposited with the Inland Revenue Department on the employee's behalf. It is calculated on annual projected income and spread across the year, not charged month by month in isolation.
- Nepali Fiscal Yearआर्थिक वर्षNepal's fiscal year runs from the first of Shrawan to the last day of Ashad in the Bikram Sambat calendar, which is roughly mid-July to mid-July in the Gregorian calendar. Tax slabs, leave accrual, bonuses and annual returns all follow it.
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