P. A. Y. E. is an acronym for “Pay As You Earn”. It is a method of collecting personal income tax from employee`s salaries and wages through deduction at source by an employer as provided by the relevant sections of Personal Income Tax Act (PITA).(S.81of Personal Income Tax Act Cap P8 LFN 2004)
PAYE does not differ because the rates used for computation are the same. PAYE rates are as shown in question number 4 below.
No. Comprehensive list of employees with PAYE deductions is continuously submitted on monthly basis steach time PAYE is being remitted to FIRS, while annual returns (form H1) is to be submitted by 31day of January of every year by every employer to enable the Tax Authority ascertain whether the correct deductions and payments of tax have been made for the previous year (period of twelve months) for all its employees.
By residency rule, an employee's PAYE is payable to the Tax Authority of his/her place of residence. It is therefore the duty of the employer to deduct and remit it to the Tax Authority where the employee is resident that is Niger State Internal Revenue Service or Nasarawa State Internal Revenue Service respectively.
Yes; the law provides that excess tax paid by any employee shall be refunded on application by the employee with the option of set-off against future tax liability.
Personal Income Tax Act (PITA) as amended defines Gross Emolument as the aggregate of wages, salaries, allowances (including benefits-in-kind), gratuities, superannuation and any other income derived solely by reason of employment.
It is lawful for a state tax authority to carry out audit of your returns to ascertain compliance. It is also lawful for penalty to be charged on any shortfall. It should be noted however that there must be reconciliation meeting by both parties where all issues must be discussed and agreed. Where a taxpayer is still not pleased with the decision reached, the taxpayer has the powers as conferred by the PITA (as amended) to appeal to the Tax Appeal Tribunal.
The due date for remitting PAYE is 10 day of every month following month of deduction
The current rates applicable to the taxable or chargeable income are as follows:
1st N300, 000.00 @ 7%
Next N300,000.00 @ 11%
Next N500,000.00 @ 15%
Next N500,000.00 @ 19%
Next N1,600,000.00 @ 21%
Above N3,200,000.00 @ 24%
Benefit in kind may be defined as those benefits or perquisites that accrue to a person by reason of office and/or position he/she occupies. Benefits in kind include such benefits as official car, official accommodation, cooks, gardeners, securities etc. It is taxable after certain deductions/reliefs granted.
The minimum tax rate is 1% of total income. It is applicable if the taxable income is below N300, 000
When there is an under deduction of tax in staff salary, the staff whose tax is under deducted bears the burden.
The sixth schedule of PITA as amended specifies the following as tax exempt. They are:
a) National Housing Fund contributions
b) National Health Insurance Scheme contributions
c) Life Assurance Premium
d) National Pension Scheme) Gratuities
This is treated as benefit - in - kind. 5% of the value of the vehicle is calculated and added back to the income of staff and taxed.
The Personal Income Tax Act (PITA) as amended provides for Consolidated Relief Allowance (CRA) of N200,000.00 subject to a minimum of 1% of gross income whichever is higher plus 20% of gross income and the balance shall be taxable in accordance with the tax rates in schedule six (6) of the Act and as in Question four (4) of this section