EdgarBounce:
Ok

Zihatu:
What is "PAYE"? So you mean pay?

Zihatu:
What is "PAYE"? So you mean pay?

spydera:
Please explain whay you mean by "paye"
Thank you

Personal Income Tax a type of tax that is paid by individuals to the government. It is classified into two: Pay-As-You-Earn (PAYE) - deducted at source for those in paid employment - and Direct Assessment -for self-employed individuals.

Based on Residency rule, the PIT is paid to the state authority in which an individual is deemed to be resident for the period under review.

As a salary Earner, it is important for you to keep tab of your tax deductions and whether your company remits the deducted tax. You are to be issued tax clearance certificates by the tax authority at the end of each year as evidence of tax payments.

How is your PAYE calculated?

In order to understand how your PAYE is calculated, you have to be familiar with the following terms:

1. Gross Annual Income: This is the total amount of income accruing to you at the end of each year. It includes your salary, allowances, bonuses, benefits in kind (accommodation, car, gardeners, cooks etc.) and other employment income.

2. Consolidated relief: This is the tax free portion of your Gross Income. It is calculated as #200,000 (or 1% of Gross Income, whichever is higher) plus 20% of your Gross Income.

3. Allowable deductions: These are the contributions that are allowed under the Act to be deducted in arriving at the taxable income. These contributions are Pension (8% of Basic salary, Housing and Transport), NHF i.e. National Housing Fund (2.5% of Basic salary), Health Insurance Scheme, Life Assurance (Max of 10% of Gross Annual Income), and Gratuities.

4. Taxable Income: This is the portion of your Gross Income that is subject to tax after deducting the consolidated relief and allowable deductions.

5. Tax rate: This is the rate that is applied on your taxable income. It is divided into bands as outlined below:

1st #300,000 - 7%
Next #300,000 - 11%
Next #500,000 - 15%
Next #500,000 - 19%
Next #1,600,000 - 21%
#3,200,000 and above - 24%

6. Minimum tax: This is applicable where the Gross Annual Income of an Individual is below #300,000.

7. Annual tax: This is the total amount of tax you are required to pay on your Gross Annual Income. This amount is then divided by 12 (12 months) to arrive at your monthly tax.

To calculate your PAYE easily, you can make use of the template I created on Google Sheets here: https://docs.google.com/spreadsheets/d/1ufPPkf4yGPq_W0S8VuYTHBvGsIufmn4pmmdp73rtPjg/edit#gid=0
Just fill out the required fields (in red) and get the result in seconds.

Rubyjade:

Osyxcel:


My post a few years ago. In light of the recent amendment, an adjustment needs to be made.

Let me quickly do that.