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WHAT IS TAX RELIEF
Rank: Member Joined: 3/23/2011 Posts: 503
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Hi wazuans, please help me understand what Tax relief is all about. I have just gotten a new job and my payslip came late. Now i remember reading about tax relief in upper primary school and the figure was still the same. 1192. What i don't understand is what the figure stands for. Someone please educate me. Even a BrOKeN clock is right twice a day
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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it's what we are donating for kenyans for kenyans initiative, haven't heard of it? you must the only one in Jerusalem
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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Rank: Elder Joined: 2/16/2007 Posts: 2,114
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@Rollins,
Thought this relief was 1162 and not 1192?I have often wondered how this figure was arrived at and it is never revised, bure kabisa...
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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@guru, ok i have put that stuff down.. pick it up later. here goes KRA word for word
"PAYE is a method of collecting tax at source from individuals in gainful employment. The employer deducts a certain amount of tax from his / her employee's salary or wages on each payday then remit the tax to the Authority. This relieves the employee from paying taxes at the end of the year and shifts the responsibility to the employers.
Every individual who receives income is granted a tax credit or a tax relief from the Authority, this is known as Personal Relief. Insurance relief and mortgage relief are also available for eligible persons. The total tax credit is spread evenly during the charge year. At the end of the year, an individual will submit his self-assessment on total income received from various sources. Should the tax credit be lower than actual tax charged during the year, the balance of tax due will be payable."
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Rollins wrote:Hi wazuans, please help me understand what Tax relief is all about. I have just gotten a new job and my payslip came late. Now i remember reading about tax relief in upper primary school and the figure was still the same. 1192. What i don't understand is what the figure stands for. Someone please educate me. Tax relief is an automatic "discount" that the government of Kenya [not KRA!!] gives to all individual taxpayers. The purpose is to reduce [or even eliminate] the tax burden on low income earners. If your tax payable if less than the relief, then you don't pay any tax. This is the case for people who earn less than Sh11,135 per month. If your taxable income is Sh10,000pm, then your tax is Sh1,000 [10%]; deducting the Sh1,162 from this we get a negative tax amount [-Sh162], therefore you don't pay any tax and you get the full 10k in your pay cheque. Any unused tax reliefs [e.g., the Sh162pm in the above example] are accumulated in a calender year but cannot be carried over from one year to the next. In addition, any unused tax relief cannot be claimed back in cash. Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 8/3/2011 Posts: 197
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mukiha wrote:Tax relief is an automatic "discount" that the government of Kenya [not KRA!!] gives to all individual taxpayers.
The purpose is to reduce [or even eliminate] the tax burden on low income earners. If your tax payable if less than the relief, then you don't pay any tax.
This is the case for people who earn less than Sh11,135 per month.
If your taxable income is Sh10,000pm, then your tax is Sh1,000 [10%]; deducting the Sh1,162 from this we get a negative tax amount [-Sh162], therefore you don't pay any tax and you get the full 10k in your pay cheque.
Any unused tax reliefs [e.g., the Sh162pm in the above example] are accumulated in a calender year but cannot be carried over from one year to the next. In addition, any unused tax relief cannot be claimed back in cash.
Rather than offering the "discount", why not reduce the tax? Just a thought... "..one is only poor only if they choose to be.."-Dolly Partron
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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@Mblue. Exactly my thoughts. The relief was necessary when it used to be conditional on marital status. The opposite of courage is not cowardice, it's conformity.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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@Mblue & jerry; When you say "reduce the tax", do you mean reduce the TAX RATES? I think you missed the point. The intention is NOT to tax you less; it is to ensure that low income earners are excluded from paying tax, but are registered as tax payers...so that when their incomes increase, they can automatically start paying taxes. If you simply reduce the tax rates or widen the brackets, you end taxing the low income group. Remember that for this group, any deduction however small can make the difference between having supper tonight or not. Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 11/21/2006 Posts: 608 Location: Ruiru
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mukiha wrote:@Mblue & jerry;
The intention is NOT to tax you less; it is to ensure that low income earners are excluded from paying tax, but are registered as tax payers...so that when their incomes increase, they can automatically start paying taxes.
. They make feel like you have been taxed less so that you don't realize as they rob you (the rich) to help (bribe) the poor. "..I am because we are. "― Ubuntu, Umtu,
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Rank: Elder Joined: 2/16/2007 Posts: 2,114
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@Mukiha,
Looking at the P9 form I see that the tax due is worked out first and then the relief is applied to get the PAYE tax rather than what you have said i.e apply the relief,then get the taxable pay ?
Thus in your example the taxable pay would be 1000
This guy would still pay some tax and the relief would not be of help to him.Please explain further
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Chaka wrote:@Mukiha,
Looking at the P9 form I see that the tax due is worked out first and then the relief is applied to get the PAYE tax rather than what you have said i.e apply the relief,then get the taxable pay ?
Thus in your example the taxable pay would be 1000
This guy would still pay some tax and the relief would not be of help to him.Please explain further @Chaka; you are misquoting me. Read again and you will see that I said you start by calculating the tax. This comes to Sh1,000 for a guy earning Sh10,000. Then you remove the tax relief of Sh1,162. This leaves a negative tax due of Sh162. So the guy does NOT pay any tax in that month. OK? Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 4/1/2008 Posts: 104 Location: Nairobi
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Tax Relief is basically amounts that can be deducted from your monthly income to reduce the amount on which tax is paid. Other than the monthly Ksh1,1620 personal relief, you can also reduce your amount of tax through the following types of relief... - life insurance - pension scheme/provident fund - home ownership savings plan - owner occupied interest (on mortgage amount or home improvements) Généralement, les gens qui savant peu parlent becoup, et les gens qui savant beaucoup parlent peu.
- Rousseau.
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WHAT IS TAX RELIEF
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