Individual income tax, refer to the amount of tax which is withheld from individual income, Individual income tax is sometimes  known as pay as you earn (P.A.Y.E), Not all amount of income are subjected to income tax, but in accordance to rules and regulation of particular state there are different range under which an amount will be subjected to income tax act in Tanzania the tax authority TANZANIA REVENUE AUTHORITY (T.R.A) has provided the specific amount upon which tax should be charged upon such income, in the so called tax bracket ,below is the list of income together with their instruction for computation  of chargeable income :-

As per income tax act no.11 of 2004, the individual income tax rate for residents with effects from 10/07/2010.

SN    Monthly income    Tax rate      
1.0    Where the total income does not exceed Tsh 135,000/=    NIL      
2.0    Where the total income exceeds Tsh 135,000/= but does not exceed 360,000/=    14% of the amount in excess of Tsh. 135,000/=      
3.0    Where total income exceeds Tsh 360,000/= but does not exceed 540,000/=    Tsh. 31,500/= plus 20% the amount in excess of Tsh 540,000/=      
4.0    Where total income exceeds Tsh 540,000/= but does not exceed 720,000/=    Tsh. 67,500 plus 25% of the amount in excess of Tsh 540,000/=      
5.0    Where total income exceed Tsh 720,000/=    Tsh.112,500/=plus 30% of the amount in excess of Tsh. 720,000/=   

For example a certain MR Y and is paid a monthly salary of 250,000/=, He is also providing a monthly contribution of 20% toward an approved pension fund. Calculate the amount of individual tax (P.A.Y.E) paid by MR Y.
You will be required to calculate the amount of contribution made toward approved pension fund
                        20%x monthly salary (250,000) = 50,000/=
You will be required to subtracts the amount of contribution made to get the net income
                       (250,000 – 50,000) = 200,000/=
Look on the tax table and compare on which range the net income lies, then compute as follows :-
since the amount lies in 1.0 row then take the net income subtracts 135,000/= of excess of the net income times 14%.
                        (Net income - excess of 135,000) X 14%       =Taxable income
                         (200,000 – 135,000)X14% = 9,100 /=

The amount of tax paid by Mr. Y is 9,100 /= per month.


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