Citizen Investment Trust (CIT)नागरिक लगानी कोष
The Citizen Investment Trust is a voluntary retirement savings scheme employees can join on top of PF or SSF. An employee elects to contribute up to 33% of basic salary, and the contribution reduces taxable income within the shared retirement ceiling.
Also called: CIT, CIT Nepal, Nagarik Lagani Kosh, citizen investment fund
Key facts
- Nature
- VoluntaryThe employee elects it; it is not automatic.
- Maximum contribution
- 33% of basicElected per employee.
- Deduction ceiling
- NPR 500,000Or one third of assessable income, whichever is lower.
- Shared with
- PF or SSFOne ceiling covers all retirement contributions.
Why an employee elects CIT
CIT is the main lever a salaried person in Nepal has over their own tax bill. PF and SSF rates are fixed by law, so the only retirement contribution an employee can choose the size of is CIT. A higher CIT election means lower taxable income and therefore lower monthly TDS, with the money going into the employee's own retirement balance rather than to the tax office.
The catch is the ceiling. Retirement contributions stop reducing tax once the total across PF, SSF and CIT passes NPR 500,000 or one third of assessable income, whichever is lower. Above that point the contribution is still savings, but it buys no tax relief, so an election made without doing the arithmetic usually lands either short of the optimum or past it.
How the optimum is found
The right CIT figure is the amount that takes the employee exactly to the ceiling and no further, given their PF or SSF contribution and their assessable income for the year. It changes when salary changes, which is why an election set once at joining is rarely still optimal two appraisals later.
- Start from the employee's annual basic salary and their existing PF or SSF contribution.
- Work out the ceiling: the lower of NPR 500,000 and one third of assessable income.
- The gap between the existing contribution and the ceiling is the CIT headroom.
- Cap the election at 33% of basic, which is the scheme's own limit regardless of headroom.
What HR has to handle
- Collect the employee's election in writing, and re-confirm it at the start of each fiscal year.
- Deduct the elected amount monthly and deposit it against the employee's CIT account.
- Feed the contribution into the TDS calculation, not just the deduction column. A CIT deduction that does not reduce taxable income gives the employee the worst of both outcomes.
Citizen Investment Trust (CIT), answered
No. PF and SSF are statutory; CIT is a voluntary election the employee makes on top, usually to reduce taxable income while building their own retirement balance.
Up to 33% of basic salary. Whether the whole of it reduces tax is a separate question, because the retirement deduction is capped at NPR 500,000 or one third of assessable income across PF, SSF and CIT combined.
Yes, and most salaried employees who use CIT do. They are different funds with different rules. What they share is the one tax-deduction ceiling, so the combined total is what matters for tax.
- Citizen Investment Trust Act 2047 and the trust's published employee scheme rules.
- Retirement contribution deduction ceiling per the Income Tax Act 2058.
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.
Related terms
- Provident Fund (PF)कर्मचारी सञ्चय कोषThe Provident Fund is a retirement savings deposit held at the Employees Provident Fund (Karmachari Sanchaya Kosh). The employee contributes 10% of basic salary, the employer matches it with another 10%, and the combined 20% is deposited monthly against the employee's PF number.
- Social Security Fund (SSF)सामाजिक सुरक्षा कोषThe Social Security Fund is Nepal's contributory social security scheme. Employer and employee together deposit 31% of the employee's basic salary every month (11% from the employee, 20% from the employer), and that pool pays out medical, accident, dependent-family and old-age benefits.
- 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.
- Income Tax Slabsआयकर दरNepal's personal income tax is charged at marginal rates across annual income bands. For FY 2083/84 the first NPR 1,000,000 is taxed at 1%, rising through the bands to a top marginal rate of 29%.
- Basic Salaryआधारभूत तलबBasic salary is the fixed core of an employee's pay, before allowances, overtime and bonuses. In Nepal it is also the base every statutory contribution is assessed on, which makes it the most consequential number in a salary structure.
- Net Payखुद तलबNet pay is the amount that actually reaches an employee's bank account: gross salary minus the retirement contribution, any voluntary CIT election, monthly TDS, and any other authorised deduction such as a salary advance.
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