FAQ: How To Calculate Paye On Salary In Nigeria?

What is the formula for PAYE?

PAYE = (Total tax payable – total rebates) / 12 Let’s look at an example: Sipho is 29 years old and in 2017/2018 tax year earns a fixed monthly salary of R20 000.

How is tax deducted from salary calculated?

Total Deductions = Professional tax + EPF (Employee Contribution) + EPF (Employer Contribution) + Employee Insurance. Total Deductions = Rs 2,400 + Rs 21,600 + Rs 21,600 + Rs 3,000 = Rs 48,600. Take-Home Salary = Rs 7,50,000 – Rs 48,600 = Rs 7,01,400.

What is the minimum PAYE tax in Nigeria?

Minimum income tax Where a taxpayer has no taxable income because of personal reliefs and allowances or total income produces a tax lower than the minimum tax, a minimum tax rate of 1% of the total income is payable.

Is PAYE calculated on gross salary?

The PAYE calculated as a result is based on the employee’s earnings and includes basic salaries, bonuses, fringe benefits and other allowances. PAYE is calculated monthly and paid to SARS by your employer monthly, even if you are paid weekly / fortnightly.

How do I calculate my salary manually?

How to Calculate Payroll Manually

  1. Determine the pay for the hourly employees.
  2. Check the overtime hours worked.
  3. Determine the pay for the salaried workers.
  4. Subtract the deductions.
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How much tax is deducted from salary?

How to calculate TDS on Salary?

Income Tax Slab TDS Deductions Tax Payable
Up to Rs.2.5 lakhs NIL NIL
Rs.2.5 lakhs to Rs.5 lakhs 5% of (Rs.5,00,000-Rs.2,50,000) Rs.12,500
Rs.5 lakhs to Rs. 6.33 lakhs 20% of (Rs.6,33,000-Rs.5,00,000) Rs.26,600

How is monthly salary calculated?

Since October has 31 days, the per-day pay is calculated as Rs 30,000/31 = Rs 967.74. This is a variant of the Calendar day basis. In this method, the pay per day is calculated as the total salary for the month divided by the total number of calendar days minus Sundays.

How much is PAYE tax in Nigeria?

It is called PAYE tax. This tax rate progresses from 7 percent to 24 percent of taxable income. Tax rates.

Annual taxable income (NGN) Rate Tax payable per annum (NGN)
First NGN300,00 7% 21,000
Next NGN300,000 11% 33,000
Next NGN500,000 15% 75,000
Next NGN500,000 19% 95,000

What part of salary is taxable?

Here are the fully taxable income components: Basic Salary: the monthly compensation paid as salary, bonuses or commissions. City Compensatory Allowance: paid to offset the high cost of living in metro areas, the CCA is fully taxable as income to the employee. Incentives: reimbursement of personal expenses.

How much is PAYE tax?

you pay 0% on earnings up to £12,570* for 2021/22. then you pay 20% on anything you earn between £12,571 and £50,270. you’ll pay 40% Income Tax on earnings between £50,271 to £150,000. if you earn £150,001 and over you pay 45% tax.

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How is PAYE Zimra calculated?

PAYE is calculated as follows: Determine gross income for the day/week/month/year. Deduct exempt income, for instance bonus as per limit in the Act, you get => Income. Deduct allowable deductions, e.g. pensions, you get => Taxable Income.

Who must pay PAYE?

PAYE, or Employees tax, is the tax that employers must deduct from the employment income of employees – such as salaries, wages and bonuses and pay over to SARS monthly. It’s withheld daily, weekly, or monthly when these amounts are paid or become payable to the employees.

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