In Nigeria, the Personal Income Tax Act requires all eligible individuals to file their personal income tax returns by March 31st of each year. The deadline is fast approaching, and it is important for individuals to understand the requirements and consequences of not meeting the deadline.
Personal income tax is a tax imposed on individuals’ income, including salaries, wages, profits, and other sources of income. Individuals’ resident in Nigeria are taxable on their worldwide income. The tax is a significant source of revenue for the government, and failure to file tax returns could result in penalties and fines.
The tax returns should include all sources of income, including salaries, wages, profits, dividends, rent, royalties, and any other income earned during the year. Deductions such as pension contributions, National Housing Fund (NHF) contributions, and National Health Insurance Scheme (NHIS) contributions can also be claimed.
The penalties for failing to file tax returns by the March 31st deadline can be severe. According to the Personal Income Tax Act, an individual who fails to file a tax return on time will be liable to pay a penalty of N5,000 for the first month and an additional N100 for every day during which the failure continues or imprisonment of six (6) months or both. Furthermore, the tax authorities can impose a penalty of up to 10% of the tax due on any undeclared income or understated tax liability.
It is important to note that individuals who fail to file their tax returns may also be barred from participating in government contracts or obtaining tax clearance certificates, which could impact their ability to conduct business.
To avoid the penalties and consequences of failing to file tax returns, individuals should take steps to ensure that they meet the March 31st deadline. This includes gathering all necessary documentation, such as pay slips and receipts, and consulting with a tax professional if necessary.
In conclusion, the March 31st deadline for filing personal income tax returns in Nigeria is a crucial date that should not be overlooked. Failure to file tax returns on time could result in significant penalties and consequences. Therefore, individuals should ensure that they meet the deadline and comply with the requirements of the Personal Income Tax Act.
N:B Employees who earn not more than the national minimum wage (currently NGN 30,000) are not liable to tax or deduction of monthly pay-as-you-earn (PAYE).
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