Hello, Professionals! What’s the most awaited day of the month for you? If your answer isn’t “Payday” or “Salary Day,” we’d be surprised! In Nepal, where salaries are paid monthly, the anticipation is even higher. Many of us find ourselves running out of cash within the first 15 days, living on a tight budget, or even borrowing to make it through the month. Wouldn’t it be great if we got paid every week instead?

Well, changing the pay cycle might not solve the problem—it’s likely more about personal finance management. Sounds complicated? Don’t worry! Start tracking your money flow and understanding your spending habits. And what better way to do that than with the Khatapana app? Over 100,000 people are already using it, and the best part? It’s free! Download it now if you haven’t already.

But today, we’re not discussing money management. We’re here to see how well you understand your “Salary.” Do you know the ins and outs of the paycheck you work so hard for? Or do you only care about what lands in your bank account? If you haven’t been paying attention to your payslip, maybe it’s time you start!

What Is a Payslip, and Why Should You Care?

A payslip is a summary of your salary details. It’s your right to receive one, as your employer is legally required to provide it. This slip breaks down your salary, showing exactly what’s added and deducted. One of the most critical components of your salary is the Basic Salary.

What Makes Up Your Salary?

Most of us eagerly await payday, planning all the things we’ll do once the money arrives. But have you ever carefully examined your pay slip to see what makes up your monthly salary? Here’s a quick breakdown:

Gross Salary = Basic Salary + Dearness Allowance + Employer’s Social Security Fund (SSF) Contribution

Your total salary includes these three components:

1. Basic Salary
2. Dearness Allowance
3. Employer’s SSF Contribution

Your Gross Salary, often referred to as the Cost to Company (CTC), is different from your Net Salary or Take-Home Pay—the amount you actually receive after deductions. 

Where Does Your Money Go?

While you receive your Net Salary, the rest of your Gross Salary isn’t lost—it’s allocated to different areas. For instance, both the Employee’s and Employer’s SSF Contributions go into your retirement fund, which you’ll receive with interest when you retire. Additionally, your company deducts salary tax (also known as TDS) and pays it to the Nepal Government.

Understanding Basic Salary: The Core of Your Paycheck

So, what exactly is your Basic Salary? It’s the core of your earnings and forms the basis for calculating many employment benefits, like your provident fund, gratuity, and leave encashment. By law, your Basic Salary should be at least 60% of your Gross Salary.

For example: If your Gross Salary is NPR 25,000 per month, your Basic Salary should be at least NPR 15,000—60% of NPR 25,000. Your employer can choose to pay more, but it cannot be less than this threshold.

Why Does Basic Salary Matter?

Your Basic Salary is crucial because most of your employment benefits are calculated based on it. A lower Basic Salary means lower benefits, which is why the law mandates a minimum threshold to protect your rights to fair compensation.

For instance: If your Gross Salary is NPR 25,000, your Basic Salary should be at least NPR 15,000. The law requires your employer to pay you a festival allowance equivalent to at least one month’s Basic Salary. So, you’d receive at least NPR 15,000. If your Basic Salary were only NPR 5,000, your festival allowance would be significantly lower.

Negotiate Smartly for a Better Future

Your Basic Salary can be higher than the 60% threshold, but never lower. When you switch jobs or negotiate a promotion, focus on securing a higher Basic Salary to maximize your benefits. If you’re still curious about how your salary is calculated, check out My Salary Slip to dive deeper into salary computation. You’ll learn about all the components of your salary, including social security contributions like provident fund, gratuity, and salary TDS.

Understanding your Basic Salary and its importance can empower you to make better financial decisions. Always check your pay slip, know your rights, and negotiate wisely to ensure you’re getting the compensation you deserve. And remember, managing your money well starts with knowing where it’s going. The Khatapana app can help you track your expenses and manage your finances like a pro—all for free! And the tap has in-hand salary calculator too.