Gross, CTC and take-home: how to read a Nepali offer letter

Gross, CTC or take-home — which number is real?

Gross is what the employer pays you before deductions. CTC is gross plus what the employer pays into your fund on your behalf. Take-home is what survives TDS and your own contribution. Only take-home reaches your bank account — but the fund balance is still your money, so judging an offer on take-home alone undervalues SSF-covered jobs.

Two offers, priced properly

Offer A pays NPR 1,20,000 a month with Provident Fund and basic at 50%. Offer B pays NPR 1,10,000 with SSF and basic at 60%. A's gross is NPR 1,20,000 a year higher — but priced on take-home plus everything paid into a fund you own, offer A is ahead by only NPR 10,088, or 0.69% of the package.

That is the whole lesson in one table. A nine-percent gap in gross salary — NPR 1,20,000 a year — comes out as a 0.69% difference in what you end up with, because the lower offer routes more of the package through SSF: 20% of a larger basic into an account you own, and a waived 1% band on top.

The two packages are close enough that the choice is about shape, not size. Offer A gives you NPR 1,11,608 more cash in the year. Offer B puts NPR 1,01,520more into a retirement balance you cannot spend this year, and buys the SSF medical, accident and dependant cover with it. Neither is the “better offer” in the abstract — but only one of them looks better in the letter.

How do you compare a CTC offer with a gross offer?

A CTC quote already contains the employer's fund contribution, so it is structurally larger than the salary behind it. To compare a CTC offer with a gross offer, strip the employer contribution out of the CTC first — otherwise you are comparing a package against a salary and the CTC will always look better.

1. 1

   Ask what the CTC includes

   Employer PF or SSF, gratuity, insurance premiums, festival allowance — every component should be listed. If the employer will not itemise it, treat the figure as marketing.

2. 2

   Remove the employer contribution

   For SSF that is 20% of basic salary, for PF 10%. Subtract it from CTC and you have the gross salary the letter should have quoted.

3. 3

   Check whether the festival allowance is inside it

   Some employers fold one month's pay into the CTC as a thirteenth month. That is money you receive, but it arrives once a year, not monthly.

4. 4

   Convert to take-home

   Run the gross through the calculator with the right fund and basic share. The in-hand figure is what you can plan a rent around.

Why does the basic salary share matter?

PF and SSF are calculated on basic salary, not on gross. Two offers with identical gross pay but different basic shares produce different fund balances and different tax. A higher basic means more goes into your fund — more relief, less tax, less cash today.

A common Nepali structure sets basic at 50–60% of gross, with the rest paid as allowances. Ask for the split in writing. If an employer offers the same gross with basic at 60% instead of 40%, the SSF contribution on your behalf rises by a third — at no cost to you, and with the tax relief that follows it.

• Higher basic: bigger fund, more relief, slightly less cash in hand.
• Lower basic: more cash now, smaller retirement balance, more taxable income.
• Either way: tax is charged on gross, so a low basic does not reduce your tax bill.

Should you negotiate on gross or on take-home?

Decide on the in-hand figure you need, then work backwards to the gross that produces it and ask for that gross. Asking for “NPR 90,000 in hand” makes an employer do arithmetic they may get wrong; asking for a specific gross with a stated basic share does not.

The take-home to gross tool does exactly this conversion for FY 2083/84, including the fund you expect to be on. Take the gross it returns into the conversation, and confirm the basic share and the fund in the same sentence — those three numbers determine everything else.

What should the offer letter actually say?

Before you sign, confirm six things in writing: gross salary, basic salary as a share of gross, which retirement fund the employer contributes to, whether the festival allowance is separate or inside the quoted figure, who bears the TDS, and the probation terms.

1. Gross salary per month, not CTC, not “package”.
2. Basic salary as an amount or a percentage of gross.
3. PF, SSF or neither — and the employer's contribution rate.
4. Festival allowance — one month's basic, and when it is paid.
5. TDS — deducted by the employer, with a statement you can check.
6. Probation — whether the fund contributions start immediately.

With those six, any offer converts cleanly into the two numbers that decide it: what reaches your account each month, and what you own at the end of the year. Everything else in an offer letter is presentation.