A Guide on Pay-as-You-Earn (PAYE)
Computation based on Personal Income Tax [Ammendment ] Act, 2011.
Compute Consolidated Salary/Gross Emolument (CS)
Determine Consolidated Salary or the gross emolument of the Taxpayer per annum
Compute Consolidated Relief allowance (CRA)
Provide relief allowance for N200,000.00 or 1% of the Consolidated Salary/Gross emolument whichever is higher plus 20% of the consolidated salary.
Tax Exempt Items (TEI)
Ascertain taxpayer’s contribution or involvement in any of the following Tax exempt items.
Ascertain Taxable Income
Compute taxable income based on steps 1 to 3 above, which is consolidated salary less Total Relief i.e Chargeable Income = CS- (CRA-TEI)
Apply Income Tax Rate (Tax Band)
Apply the following Tax Rates (tax band) to the chargeable income to arrive at the Tax payable per annum.
Determine the minimum Tax Payable
Where the chargeable Income obtained in step 5 above is lower than 1% of the Consolidated Salary or Gross emolument then, 1% of Consolidated Salary shall be the Tax payable per annum.
Determine Monthly Tax payable
The Tax payable per annum is spread over the 12 months in a year.