Pay as You Earn Calculator – Zambia

There has been a lot of hype [1, 2, 3] about Zambia’s supposedly “Pro-Poor” 2012 budget… and rightfully so –it is perhaps the one most significant piece of evidence linking the Patriotic Front [4] to their Socialist agenda. The one thing everyone seems to be talking about though is the new PAYE Tax bands; and effective April 1, 2012 the new personal tax rates in Zambia be as depicted in table below.

Income Tax Bands (ZMK)Tax Rates (%)
ZMK 2,000,000 and Below0%
ZMK 2,000,001 - ZMK 2,800,00025%
ZMK 2,800,001 – ZMK 5,700,00030%
ZMK 5,700,000 and Above35%

ZRA Tax Computation Guide

The constitution of Zambia –under the PAYE system– mandates employers to deduct gross payments using the following variables

  • Total gross pay
  • Tax bands
  • Statutory deductions (e.g. NAPSA)

A key thing to bare in mind is that all statutory deductions are removed before the tax calculation. For instance if my greedy employers pay me ZMK 4,000,000.00 every month then the  tax calculations would be as follows:

  • STEP 1: Deduct NAPSA (mandatory statutory contribution)
Amount (ZMK)
Gross Income4,000,000
NAPSA Deduction155,000
Taxable Amount3,845,000
  • STEP 2: Compute Tax Deductions
Tax (ZMK)
Initial 2,000,000 will be taxed at 0%0
Next 800,000 of your remaining amount will be taxed at 25%200,000
Next 1,045,000 of your remaining amount will be taxed at 30%313,500
Balance of your remaining amount will be taxed at 35%0
Total Tax payable513,500
  • STEP 3: Compute Take Home
Amount (ZMK)
Gross Pay4,000,000
NAPSA155,000
PAYE513,500
Take Home3,331,500

I have also set up an embedded spreadsheet caculator below that can be used to compute the PAYE tax when inputed with specific figures. Feel free to replace the existing figures with your own. Please leave a comment if you have a suggestion or if you notice an anomaly.

Please substitute only the figures in RED to compute tax and net pay for a desired amount.

More money in your pockets????

References

[1]https://www.facebook.com/groups/149657968431200/
[2]http://www.lusakatimes.com/2011/11/11/2012-full-budget-address-speech-finance-minster-alexander-chikwanda/
[3]http://www.zambianwatchdog.com/archives/26116
[4]http://www.patriotic-front.com/
[5]http://www.mlss.gov.zm/upload/SI/SI%20general.pdf

Categories: Zambia
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  • Beyard Mututa

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    Wel, the new tax band seems extremely impresive and i believe will lead to more money in the pocket. On the contrary, it means reduction of the most needed government revenue – ‘prima facie’, but new tax measures have been put in place to suplement the created gap. More effort to be directed at bringing on board the majority of the zambian people in the informal sector who are not taxed! I strongly support the new government’s policies and I hope it will not divert from them.

  • AM

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     My more money in the pocket is only 6.3%, I am not that excited.

    • http://lightonphiri.org/ Lighton Phiri

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      @36ada401386c4c846c6d9e0475e7426b:disqus Its better than nothing ;) Its a step in the right direction.

  • Lewis Chola

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    Hi Lighton

    If the tax threshold has been increased from 1m to 2m, doesnt mean that our net pays will go up by 1m?? Please explain if this is not the case

    • http://lightonphiri.org/ Lighton Phiri

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      @55737a7f13c960ef20843f838be66cd0:disqus sorry I took long. No it does not mean that net pays will go up by 1m –the thresholds are not linear. The calculation is done in bands. It does, however, mean that your net pay will increase; the factor at which it will increase largely depends on your gross pay.
      I hope this helps.

  • Mwamba

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    Dear Langton, Thanks for this good work of piece, it made my life very easy.  One more issue, could you please advise how the NAPSA is calculated, or better still insert a ka formular . Keep it up and indeed job well done

    • http://lightonphiri.org/ Lighton Phiri

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      @ac1560b3d94ef6c2b727e65a74f0cb71:disqus I’ve updated the post with a section that pretty much explains how they go about deducting your gross pay. They basically systematically deduct your gross pay in clusters after removing your NAPSA contributions. Let me know if the steps still don’t make sense –I’ve never been very good at explaining concepts :( I hope this helps.

  • Pretty Woman

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    hlep calculate for me my net pay. Gross is K3.8m

    • http://lightonphiri.org/ Lighton Phiri

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      @pretty_woman:disqus Your net pay should be ZMK 3,167,000. I hope this helps.

      • Pretty Woman

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        thank you but i want to know % of Napsa. Please break it down for me like you did with the K4m above

        • http://lightonphiri.org/ Lighton Phiri

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          @pretty_woman:disqus NAPSA is apparently rated at 5% [1] and so your computations would be as follows:

          Basic Pay – 3,800,000
          NAPSA – 190,000
          PAYE – 443,000
          Net Income/Take Home – 3,167,000

          Could you confirm if the computations are correct? The only way I can verify my computations is by using my old payslips –latest one is from February, 2011. In theory, the computations above should be correct.

          [1] http://www.napsa.co.zm/index.php/features

          • Pretty Woman

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            Thank you. Good day

  • CWM

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    Good day Lighton, Thank you for this blog, i have a few questions that i hope you can help me understand(1) i have noticed that my payslip has a different PAYE it goes up every month should this be or is this right? (2)My Napsa deductions are is this the correct deduction?

    • http://lightonphiri.org/ Lighton Phiri

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      @CHILLZM:disqus Good to know you found the post helpful. See my comments below.

      (1) As far as I know, in theory, the only time PAYE should go up is if either your employers gave you a salary increment or if get additional variable allowance… e.g. overtime or overnight allowance or something… these additional income streams would effectively increase your basic pay and thus your PAYE as well… my guess is you sometime get allowances and as far as my knowledge of Zambia goes, its mostly overtime…

      (2) NAPSA employee contributions are financed at a standard rate of 5% [1]. However, you should note that this amount is deducted from your total basic salary before computation of PAYE.

      What are your thoughts on this? Does this make any sense? Send me an email and I’ll help with the computations –I won’t tell anyone ;) . I hope this helps.

      [1] http://www.napsa.co.zm/index.php/features

  • cwm

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    Lighton, good evening, i sent you an email with attachments kindly let me know what you think.

  • joshua

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    I get 1,500,000 but i am tax. What should i do.

    • http://lightonphiri.org/ Lighton Phiri

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      @46ce057b341a127167f11b277ed2fe04:disqus I would strongly suggest that you make a claim and apply for a tax refund for April, May and June 2012. However, you should not mistake PAYE for NAPSA deductions… NAPSA will still be deducted from the 1,500,000

  • John

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    Hi Lighton , good work u r doing.What is the PAYE and Napsa amounts do you pay on gross pay of 8,045,054.74, and
    Is there a % on pension?

  • Annie

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    Good Day. how can South Africans working in Zambia claim back their PAYE / tax on their salaries? pls respond to aquamarinecreations@gmail.com

  • Christian

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    Hey hi, good work you got here, but help me break this down my gross K 4,360,000.
    Awaiting.

    • http://lightonphiri.org/ Lighton Phiri

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      Hello there, working with the standard 5% NAPSA deduction, the breakdown is as follows. I hope this helps

      Gross -> 4,360,000
      NAPSA -> 218,000 [5% of gross]

      Taxable Amount -> 4,142,000.00
      PAYE -> 602,600.00
      Total Tax Due -> 820,600.00
      Net Income -> 3,539,400.00

  • Sunny

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    This is some good stuff

    • http://lightonphiri.org/ Lighton Phiri

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      I am wondering how you got to find yourself here Lwele :) Still waiting for that phone call…

  • Ken

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    I think its high time l found a mentor! Big up to Mr. Phiri. Ken – kennedysinyinza@yahoo.com

  • tizee

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    If you sell your leave days how should the TAX it? does it full in an allowance u add to your basic pay or it can be taxed on its on