Dashain is Nepal's longest and most widely celebrated festival, and for millions of employees it also marks the arrival of a festival allowance—often called Dashain bonus or festival bonus. HR departments start spreadsheets weeks before Ghatasthapana; family budgets depend on that lump sum for travel, new clothes, gifts, and feast expenses. Yet the "one month basic" rule of thumb is not universal: banks, NGOs, factories, and government bodies each follow policies shaped by the Labour Act, collective bargaining agreements (CBAs), and internal grade tables.
This guide explains how employers typically calculate Dashain allowance, which salary components belong in the base, how pro-rating works for mid-year joiners, and what tax treatment employers commonly apply under Inland Revenue Department (IRD) practice. Use the Dashain Allowance Calculator to model scenarios—but always confirm the final number against your appointment letter, HR policy, or union agreement.
What is Dashain allowance?
Dashain allowance is a periodic cash benefit paid around the Dashain–Tihar season so employees can meet extra festival expenses. It is distinct from regular monthly salary, overtime, and annual performance bonuses—though casual language sometimes lumps them together. In many private-sector firms the allowance equals one month's basic salary. Public-sector and banking schedules may publish fixed amounts by grade. Start-ups sometimes pay a flat NPR figure for all staff regardless of seniority.
The payment timing usually falls in Ashwin/Kartik (September–October in the Gregorian calendar), aligned with payroll cycles. Some organisations split advance and balance; others pay a single tranche before employees leave for home districts.
Legal and policy context
Nepal's labour framework recognises festival-related benefits in various industries through CBAs and employer policies. The precise entitlement for your workplace is defined by:
- Your individual employment contract or appointment letter
- The employer's HR handbook or festival bonus circular
- Applicable collective bargaining agreement if you are union-covered
- Industry norms (banks and INGOs often differ from informal sector wages)
There is no single national formula mandating "exactly one month gross" for every private employee in every sector—though one month basic is the dominant convention in formal employment. When in doubt, ask HR for the written rule rather than relying on colleague anecdotes from a different department.
Common calculation approaches
Fixed amount by grade
Large organisations publish a table: Grade 7 receives NPR X, Grade 8 receives NPR Y, and so on. The allowance does not float with current basic if the table is absolute—unless the circular says "one month basic, minimum NPR X."
Salary-linked: months of basic
Allowance = Basic salary × Number of months
One month (1.0) is standard. Some generous policies offer 1.5 months for certain grades; contractual roles may specify 0.5 months if employment started mid-year and pro-rating applies.
Percentage of basic
Allowance = Basic × (Percent ÷ 100)
Functionally similar to fractional months—100% of basic equals one month.
Pro-rating for partial service year
If policy allows, employees who joined after the fiscal or calendar cut-off receive a reduced allowance:
Pro-rated allowance = Full allowance × (Eligible months worked ÷ 12)
Not every employer pro-rates; some pay full festival bonus after a minimum tenure (e.g., six months). Read the circular.
Which salary components count as "basic"?
Misunderstanding the base causes the largest gap between expectation and payslip.
- Usually included: contracted basic pay (the core line on your salary slip)
- Usually excluded unless policy says otherwise: overtime, travel allowance, fuel, mobile, housing, and performance incentives
- Debate zone: dearness allowance or grade allowance—some CBAs fold these into festival base; others do not
Gross salary and basic salary are not interchangeable. If your gross is NPR 55,000 but basic is NPR 30,000, a "one month basic" festival payment is NPR 30,000—not 55,000.
Worked example: one month basic
An employee earns NPR 42,000 basic monthly. Policy grants one month's basic as Dashain allowance.
- Allowance = 42,000 × 1 = NPR 42,000
If the same employee receives NPR 18,000 in allowances monthly, festival bonus still tracks basic unless HR policy explicitly widens the base.
Worked example: half month for mid-year joiner
Policy: one month basic, pro-rated for staff with fewer than six months' service by 1 Shrawan, at 50% of full entitlement. Basic = NPR 36,000.
- Full entitlement would be NPR 36,000
- Pro-rated at 50% = NPR 18,000
Worked example: grade table vs formula
A bank publishes NPR 50,000 festival pay for Officer Grade III regardless of individual basic variations. An officer whose basic is NPR 48,000 still receives NPR 50,000 if the table governs. Conversely, if the circular says "one month basic, whichever is higher," compare 48,000 to the table floor and apply the rule stated.
Tax treatment (indicative — verify with IRD)
Employers commonly treat festival bonus up to one month's basic salary as tax-exempt or separately accounted under income-tax practice, while amounts above that threshold may be added to taxable income for the year. IRD rules and Finance Act provisions evolve; payroll teams issue internal memos each fiscal year.
Our calculator can show an indicative split between exempt portion (capped at one month basic) and taxable excess when allowance months exceed 1.0. This is educational—not tax advice. Consult IRD publications (ird.gov.np) or your employer's tax consultant for FY 2082/83 and beyond.
Employer fairness and transparency tips
- Publish the rule once in writing before calculation season—reduces rumor and favoritism claims.
- Apply the same base definition (basic vs gross) across departments.
- Document exceptions (retiring staff, suspended employees, probationers) in the same circular.
- Show the arithmetic on payslips or festival payment advice notes.
- Align payment date with bank cut-offs so rural travel plans are feasible.
Household budgeting angle
Employees often allocate festival allowance mentally before it arrives: remittance to parents, school fees, appliances, or loan prepayment. Modelling the net amount after any tax withholding prevents overspending on credit. Families with multiple earners should combine expected festival receipts with regular Kartik-month salary—not double-count if salary is also paid normally.
Common mistakes
- Assuming gross salary is the base when policy uses basic only.
- Comparing unlike employers — INGO per diem structures differ from factory CBAs.
- Ignoring pro-ration clauses for new joiners.
- Forgetting prior advance payments deducted from final festival tranche.
- Tax surprise on amounts above one month basic without payroll communication.
- Contract workers expecting employee festival bonus without contractual entitlement.
References & further reading
- Inland Revenue Department, Nepal — income tax circulars and festival bonus treatment (ird.gov.np).
- Ministry of Labour, Employment and Social Security — labour administration context.
- Employer collective bargaining agreements in your sector (banking, hospitality, manufacturing).
- ILO resources on wage benefits and festive bonuses in South Asia (ilo.org).
- Your organisation's HR policy handbook and latest Ashwin/Kartik festival circular.
Frequently asked questions
Is Dashain allowance mandatory for all jobs?
Entitlement depends on contract, law applicable to your establishment, and CBA—not on festival culture alone. Informal daily-wage work may not include it.
How many months of salary is typical?
One month basic is the most common formal-sector convention; verify your own policy.
Do interns and probationers get festival bonus?
Only if policy explicitly includes them—many employers exclude or pro-rate probationers.
Is festival allowance the same as the 13th month salary?
Colloquially people conflate them; legally and payroll-wise they may be separate line items. Read definitions in your handbook.
Can my employer pay goods instead of cash?
Some factories historically paid rice or goods; modern formal payroll usually pays cash. Contract terms govern.
Model your festival payment
Enter basic salary and allowance months in our Dashain Allowance Calculator to estimate Dashain bonus, review indicative tax notes, and align household plans—then confirm the final figure with HR before you budget travel and gifts.