Personal Income Tax FAQS

It is a tax that is imposed on the gain or profit from any trade, business, profession or vocation; or any salary, wage, fee, allowance or other gain or profit from employment of individuals.

Personal Income Tax (Amendment ) Act 2011.

Individuals who are either in employment or are running their own businesses under a business name or partnership and communities, families and any trustee or executor under any settlement, trust or estate deemed to be resident in the State at a particular year.

Yes. SBIR collects Income Tax from the following set of tax payers:

(a.) Individuals in their various states of residence,
(b.) Body of individuals such as communities, families that run a business;
(c.) Business names and partnerships;
(d.) Executors of estates of deceased persons and trustees of trusts.

Yes. FIRS collects Income Tax from the following set of tax payers:

(a.) Persons employed in the Nigerian Army, the Nigerian Navy, the Nigerian Air Force and the Nigerian Police other than in a civilian capacity;
(b.) Body of individuals such as communities, families that run a business;
(c.) Officers of the Nigerian Foreign Service;
(d.) Non-residents who derive income or profit from Nigeria.

Tax on the income of self-employed individuals or that of communities, families, trustee or executor is paid directly to the tax authorities while the employers deduct appropriate tax from the income of their employees and remit same to the tax authorities on monthly basis.

A Consolidated Relief Allowance shall be granted on income at HIGHER of 1% of Gross Income or a flat Rate of N200,000.00 PLUS 20% of Gross Income.

The following deductions are exempted from PITA.

(a.) National Housing Fund Contribution
(b.) National Health Insurance Scheme
(c.) Life Assurance Premium
(d.) National Pension Scheme
(e.) Gratuities

After the relief allowance and exceptions had been granted, the balance of income shall be taxed as specified in the following Sixth Schedule Table:

(a.) First N300,000 at 7%
(b.) Next N300,000 at 11%
(c.) Next N500,000 at 15%
(d.) Next N500,000 at 19%
(e.) Next N1,600,000 at 21%
(f.) Above N3,200,000 at 24%

Every employer shall be required to file a return with the relevant tax authority of all emoluments paid to its employees, not later than 31st January of every year in respect of all employees in its employment in the preceding year.

The penalty for failure to file returns according to the Personal Income Tax (Amendment) Act, 2011 is N500, 000 for corporate organisations and N50, 000 for individuals.

1% of Gross Income.

You can officially obtain information on all taxes paid on your behalf through the Executive Chairman of OGIRS.

It is the ‘do it yourself’, easier and convenient approach recently introduced by OGIRS which enable a new tax payer to assess him/herself, make payment through any of the designated banks and obtain his/her e-TCC without visiting any tax office or officer.

PAYE and Direct Assessment are two ways of assessing individuals to tax. PAYE is for individuals under paid employment and Direct Assessment is for Self Employed individuals.

Yes. The Personal Income Tax (Amendment) Act, 2011 combined with the provisions of S.3 (1)(b) and S.3(1)(b)(i) particularly defining the taxpaying employee as either a temporary or permanent employee.

Yes. The position of the law is that all adult from the age 18 and above must pay Personal Income Tax except those exempted by the law as stipulated in the Third Schedule of PITA 104 CAP P8 LFN 2004 & (Amendment) at 2011.

Yes. Withholding Taxes is recognized as part of taxes paid and can be net off from liability assessed for the year and balance is paid.

No, for continuity and adequate record keeping, Tax payers who have tax records at any OGIRS office should approach the same office for proper assessment on yearly basis. This is important for proper coordination.

As a self employed you can file returns following the below steps:

(a.) File your Annual Tax Returns with the Assessment Authority nearest to you, or approach the office for assistance if you do not know how to prepare the returns;
(b.) An Assessment Notice containing the amount of tax due for payment by you will given to you by the Assessment Authority after due assessment of the returns;
(c.) Pay the assessed amount to any branch of the designated banks and obtain Acknowledgement of Payment Slip in addition to the bank teller for the payment as evidence that you have paid to the correct government account;
(d.) Present the teller and the Acknowledgement of Payment Slip to the Assessment Authority that issued the Assessment Notice to obtain Revenue Receipt for your payment.

As an Employee (Taxpayer in employment) you can file returns following the below steps:

(a.) At the beginning of the year, file your Annual Income Declaration with the Assessment Authority nearest to you;
(b.) After due assessment, you will be given Annual Tax Estimate which will detail your expected income, reliefs granted and monthly Tax Estimates based on the information supplied in the Annual Income Declaration Form.
(c.) Present the Income/Tax Estimates to your employer who has the duty to deduct the monthly estimated tax and other tax that may accrue on additional income not declared in the Annual Income Declaration Form.
(d.) Your employer will remit tax deducted from your monthly income to the Internal Revenue Service by paying the deductions to any branch of the designated banks not later than the 10th of the month for previous month’s deduction;
(e.) Your employer will obtain Acknowledgement of Payment Slip in addition to the bank teller for the payment as evidence that the money was paid to the correct government account;
(f.) Your employer will present the teller and the Acknowledgement of Payment Slip to the Assessment Authority nearest to it to obtain Revenue Receipt for the payment.