"I have always wondered about how Pay As You Earn (PAYE) tax is computed, but I never really paid much attention. Recently, at my request, Human Resources and Accounts departments of advised a break-down of the computation of PAYE and honestly, I almost rushed out to stage a solo-protest to the National Assembly.
Well, if you promise not to slap the person next to you, I'll share the same computation template with you.
Basically, there is the Non-Taxable Income, which comprises allowance limits for different expenses a normal person is expected to have. These include Personal Allowance, Dependant (close family), Children, Housing, Transportation, Meal, Utility, Entertainment and Leave / Vacation allowances.
Now what are these allowance limits that make up the Non-Taxable Income? Please take a deep breath and find below:
- Personal Income – 20% of Gross Income, plus N5,000.00
- Dependant – Maximum of 2 dependants per person, at N2,000.00 per dependant
- Children – Maximum of 4 children per person, at N2,500.00 per child)
- Housing – N150,000.00
- Transport – N20,000.00
- Meal – N5,000.00
- Utility – N10,000.00
- Entertainment – N6,000.00
- Leave allowance – 10% of Basic salary.
All these amounts are PER ANNUM!!!"
- Diekola Onaolapo
Stalk my blog at www.xokigbo.com
Follow me on Twitter: @ikhide
Join me on Facebook: www.facebook.com/ikhide