crucial part of the everyday life of every person. We encounter taxes everywhere: at work, in a supermarket, and even at home. However, personal income tax is the most important of them. We have gathered all the vital information about it so that you understand all the intricacies of the law. Income tax image: pixabay.com Source: UGC If a thought about calculating and paying your personal income tax scares you, do not worry. Luckily, you have us to help you with this issue. Read on and become a fearless master of taxes. What is personal income tax and personal income tax act? To start off, we should understand what a tax is. It is an obligatory payment all citizens of a country must make to a government. A government, in turn, uses this money to improve and sustain the functioning of a country and the life of its residents. Personal Income Tax (PIT) is a kind of obligatory levy that all individuals who gain any type of profit are obliged to pay. These people usually either are employed or have their own enterprises with or without employees. Personal income taxpayers also can be self-employed people. Money coins Image: pixabay.com Source: UGC All profits of the Nigerians fall under taxation. Even if you earned your money working for a foreign company and this revenue has a foreign origin, the levy is applied if the money is remitted to Nigeria. However, artists and athletes who earned money abroad are not obliged to pay the levy for these funds. They pay the levy only for money earned on the territory of Nigeria. Foreigners also pay the tariff only for funds earned in Nigeria. Personal Income Tax Act is the amendment of the Personal Income Tax Cap P8, LFN 2004. This law is relevant to levies and taxpayers. In Nigeria, taxpayers are all people who earn salaries or gain any kind of profit out any other sources of money. Your rights and obligations as a taxpayer Coins Image: pixabay.com Source: UGC As a taxpayer, you can demand from the authorities to be informed about what your levy money was spent on. Also, you are able to request any information about the procedure of paying the levies and all related matters, the authorities must fulfil this request. Having rights never goes alone without having certain obligations. In the case of PIT, all individuals must not keep in secret their sources of revenue and the amount of money they make. Also, based on your salary, you should pay your tariffs in time and calculate correctly the amount of taxes you have to pay. If you have, under any circumstances, failed to pay a PIT, certain penalties will be applied. 10% of the sum of levies not duly paid will be added to your obligatory payments. Additionally, you will be forced to cover all expenses related to the attainment of the funds not initially paid to the government. There are two ways by which the PIT can be paid. The first one is PAYE or pay-as-you-earn method. It applies to all people who work full-time for an employer. In this case, the employer is obliged to pay the levy for you by subtracting it from the salary you earn. Thus, you get your money with levies deducted already. By the way, employees who earn less than N300,000 a year must apply for a return of the levy. The second way is applied to self-employed individuals or those people owning a business and is called self-assessment or direct assessment. In this case, such individuals calculate the levy themselves and pay it to the relevant tax authority directly. Personal income tax rate in Nigeria In Nigeria, the rate of the PIT depends on the amount of money a person makes in one year. For the first N300,000, the levy rate is 7%. If a person makes another N300,000, then the rate increases to 11%. The next N500,000 escalate the deductible tariff rate to 15%, and subsequent N500,000 heighten it to 19%. The next N1,600,000 raises the levy rate to 21%. Then, in case a person receives another portion of revenue over N3,200,000, the rate soars to 24%. What is income tax in Nigeria? Money to pay Image: pixabay.com Source: UGC You should not confuse personal income tax with income tax (IT) or companies income tax (CIT). CIT is applicable to corporations and similar organisations. Such companies are entitled to pay the IT at the rate of 30% of their annual income. All corporations located in Nigeria are liable to this kind of taxation. Personal income tax in Nigeria can be a tricky matter. All Nigerian citizens have to pay this levy if they gain any revenue. The rate of the levy depends on how much money an individual makes. Your employer can pay PIT if you are an employee, or you have to calculate and pay it yourself if you are a self-employed person. Paying the tax on time is crucial. In the other case, unpleasant penalties will be applied. DIsclaimer This article is intended for general informational purposes only and does not address individual circumstances. It is not a substitute for professional advice or help and should not be relied on to make decisions of any kind. Any action you take upon the information presented in this article is strictly at your own risk and responsibility!
Source: Legit
