How to calculate Pay-As-You-Earn (PAYE) taxes for employees in Delta State


A tax assessment system called the Pay-As-You-Earn System was created to make it straightforward to collect taxes from taxpayers who are working. The Pay-As-You-Earn (PAYE) Regulations, which were made in compliance with the provisions of the Personal Income Tax Act and the Personal Income Tax Act, both apply to the Scheme. 

According to the Act, if the competent tax authority demands it, every payment given to a person that is subject to income tax, regardless of whether an assessment has been made, shall be deducted from that payment. 

This article’s main focus is on how to calculate Pay-As-You-Earn tax on recurring income, i.e., on a regular income, for employees in Delta State, but before that, let us dive a bit into PAYE tax, the State Internal Revenue Service (SIRS), and the Delta State Internal Revenue Scheme.

Pay-As-You-Earn tax

A tax known as the Personal Income Tax (PIT) is levied against all types of people, including workers, participants in a partnership, unincorporated trusts, joint ventures, families, and communities. It is applied in accordance with source and residence laws. The Finance Act 2020 and the Personal Income Tax Amendment Act of 2011 (PITAM) are the two main pieces of legislation.

Pay-As-You-Earn (PAYE) is the system used in Nigeria for personal income tax, which implies that as an individual makes money, the employer deducts tax at the source. Every person who receives money through work or operating a company is required to pay Personal Tax to the State Internal Revenue Service.

Employers are responsible for withholding tax from employee pay and remitting it to the appropriate state Internal Revenue Service, or FCT-IRS in the case of employees who reside in the Federal Capital Territory. It is the responsibility of those who own their own enterprises to pay PAYE tax to the appropriate authorities.

Pay-As-You-Earn tax at The State Internal Revenue Service (SIRS)

The State Internal Revenue Service (SIRS) is a division of the various state governments in Nigeria, including the Federal Capital Territory, and it is tasked with collecting income and employment taxes as well as upholding local tax regulations. All employers of labour are required to withhold, remit, and file personal income taxes (PAYE) in the case of employment taxes. 

They also have to report transactional and consumption taxes to the government through the SIRS, including Withholding Tax (WHT), and Hotel Occupancy and Restaurant Consumption (HORC). The 10th of every month after the month of deductions is the deadline for PAYE remittances. While January 31st is the deadline for submitting annual tax returns (PAYE),

Delta State Internal revenue Scheme Pay-As-You-Earn

When Delta State was created on August 27, 1991, the Delta State Board of Internal Revenue (DBIR) was created as an extra-ministerial department. The previous Bendel State Board of Internal Revenue, from which Delta State was derived, is where it originated. 

The main responsibility of DBIR is to generate income via the assessment and collection of taxes and tariffs so that the state government may meet all of its many financial obligations. The organization in charge of overseeing and managing the various taxes and tariffs listed in the schedule of the Delta State Internal Revenue Consolidation Law, 2009, is the Delta State Board of Internal Revenue.

How to calculate Pay-As-You-Earn (PAYE) taxes for employees in Delta State

In Nigeria, Pay-As-You-Earn Income Tax is computed depending on your earnings. Depending on your income, different rates of income tax are levied according to a threshold-based formula.

The table below represents how this should be calculated using Nigeria’s standard PAYE rate

Annual Taxable Income (NGN) RateTax due each year (NGN)

First NGN300,00
Next NGN300,00011%33,000
Next NGN500,00015%75,000
Next NGN500,00019%95,000
Next NGN1,600,00021%336,000
Above NGN3,200,00024%Multiply only the excess amount over NGN3.2 million by 24%. For example, an annual taxable income of NGN5 million is (5-3.2) million * 24% = NGN432,000.

In cases where a person has no taxable income or if the Pay-As-You-Earn tax is lower than the minimum tax, a minimum tax of one percent of gross income will be applied. A low-income earner in Nigeria is exempt from the minimum tax, nonetheless. A low-income earner is one who makes the National Minimum Wage or less, according to the Finance Act 2020. In Nigeria, the barrier is now NGN30,000 per month, or NGN360,000 annually.

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