Pay as You Earn Calculator – Zambia

Update #3 (January 26, 2015): I have updated post to reflect the NAPSA 2015 ceilings.

Update #2 (November 3, 2014): I have updated post to reflect the NAPSA 2014 ceilings.

Update #1 (August 1, 2014): I have updated post with 2014 tax bands; changed to new Kwacha ISO code& replaced embedded spreadsheet with interactive HTML form.

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.

TL;DR

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

Income Tax Bands

Income Tax Bands (ZMW)Tax Rates (%)
3,000.00 and Below0%
3,000.01 - 3,800.0025%
3,800.01 – 5,900.0030%
5,900.00 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 ZMW 4,000.00 every month then the  tax calculations would be as follows:

  • STEP 1: Deduct NAPSA (mandatory statutory contribution)
Amount (ZMW)
Gross Income4,000.00
NAPSA Deduction200.00 (5%)
Taxable Amount3,800.00
  • STEP 2: Compute Tax Deductions
Tax (ZMW)
Initial 3,000 will be taxed at 0%0
Next 745 of your remaining amount will be taxed at 25%200.00
Next 0 of your remaining amount will be taxed at 30%0
Balance of your remaining amount will be taxed at 35%0
Total Tax payable200,00
  • STEP 3: Compute Take Home
Amount (ZMW)
Gross Pay4,000.00
NAPSA200.00
PAYE200.00
Take Home3,600.00

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
Tags: , , , ,
  • Phiri

    The Disqus plugin’s not sending notifications… this is a test message.

  • Beyard Mututa

    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

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

    • http://lightonphiri.org/ Lighton Phiri

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

  • Lewis Chola

    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

      @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

    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

      @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

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

    • http://lightonphiri.org/ Lighton Phiri

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

      • Pretty Woman

        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

          @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

            Thank you. Good day

  • CWM

    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

      @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

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

  • joshua

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

    • http://lightonphiri.org/ Lighton Phiri

      @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

    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

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

  • Christian

    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

      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

    This is some good stuff

    • http://lightonphiri.org/ Lighton Phiri

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

  • Ken

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

  • tizee

    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

    • http://lightonphiri.org/ Lighton Phiri

      It’s still income and so you would have to add it to the Basic Pay. The only strands you exclude are statutory contributions…

  • vishnu

    Can you please guide me in a calculation where i need to get net pay as 6993.So what is the basic and deductions.

    • http://lightonphiri.org/ Lighton Phiri

      @disqus_pCA7sIdJwm:disqus Terribly sorry for the delay. It appears I missed a lot of comments. You would need a basic of ZMW 9,113.46

      Basic Pay ….. ZMW 9,113.46
      NAPSA ……… ZMW 255.00
      Tax …………… ZMW 1,865.46

  • kay

    please help me calculate tax on my gratuity of K45,000 annual

  • kaps

    please help, my gross is K5,000 how much is my take home?

    • http://lightonphiri.org/ Lighton Phiri

      @disqus_BE70mgkf3R:disqus Missed your comment. Hope it’s NOT too late, but your Take Home, effective April 1 2014, is ZMW 4,261.5

  • Silvester mbazima

    FANTASTIC IMPROVEMENT BY ZRA

    • http://lightonphiri.org/ Lighton Phiri

      @silvestermbazima:disqus It’s actually the PF Government NOT ZRA :) ZRA is only there to implement policy ;)

  • George

    Please help me my Gross is K 3,109 how much is my Take Home?.

    • http://lightonphiri.org/ Lighton Phiri

      Take Home ….. ZMW 2,854

  • brenda

    my gross is 9, 500 help me find my net pay

    • http://lightonphiri.org/ Lighton Phiri

      Net Pay ….. ZMW 7,244.25

  • brenda

    my gross is 9500, please help me know my net pay

    • http://lightonphiri.org/ Lighton Phiri

      ZMW 7,244.25

  • clive

    my gross 6582, what is my net?

    • http://lightonphiri.org/ Lighton Phiri

      Net Income ….. ZMW 5,347.55

  • promco

    say for instance in april 2014 my salary is 13375.33 what will Paye be and net?

    • http://lightonphiri.org/ Lighton Phiri

      PAYE ………….. ZMW 3,357.12

      Net Income ….. ZMW 9,763.21

  • promco

    if ones salary in april2014 is 2158.65 what will net be?

    • http://lightonphiri.org/ Lighton Phiri

      Net Pay will be ZMW 1,903.65. The only deduction would be NAPSA contributions (ZMW 255.00)

  • promco

    if my gross is k36042 what will be paye in april2014 be?

    • http://lightonphiri.org/ Lighton Phiri

      With that amount, your PAYE will be ZMW 11,290.45

  • BWALYA

    Hi my gross pay is 3600 please with the 2014 tax band help me to compute my net pay

    • http://lightonphiri.org/ Lighton Phiri

      @disqus_5bIyqSfUn8:disqus Sorry for the delay… missed your comment.

      NAPSA: ………. ZMW 255.00
      PAYE Tax: ……. ZMW 86.25
      Net Pay: ………. ZMW 3,345.00

      I hope this helps.

    • Bwalya G

      Mr Phiri say something about the kr255 .00 Napsa figure what percentage are you using to come up with that?

      • http://lightonphiri.org/ Lighton Phiri

        @disqus_5bIyqSfUn8:disqus To the best of my knowledge, the current allowable deduction for NAPSA is ZMW 255.00 or 15% of Basic Pay–whichever is lower. Using ZMW 3,600.00 as an example 15% would be ZMW 540 making ZMW 255.00 lower.
        Please let me know if the computations don’t correspond to what’s on your payslip so we can figure out why…

  • Wellington Bwalya

    basic pay 1368 pliz help calculate gratutity for a 2 yrs contract and any tax
    Thanks!

    • http://lightonphiri.org/ Lighton Phiri

      @Wellington Bwalya:disqus
      Missed your comment; with that amount, you are within the ‘Tax Free
      Threshold’ and so the only deduction would come from NAPSA–ZMW 205.20.

      Deduction/Month ………. ZMW 205.20
      Net Pay/Month ………….. ZMW 1,162.80

      To the best of my knowledge, gratuity conditions are company specific–I cannot help compute it without more details… I’d advise that you go through your contract to figure that out.

  • Kenneth KALUBA

    Much as your tax calculator is highly appreciated and is used to calculate our PAYE, another formula could have been set, but, where there`s NAPSA you use LASF to help those who contribute to LASF, Kaluba Kenneth

    • http://lightonphiri.org/ Lighton Phiri

      @Kenneth KALUBA
      Thank you for this. If I understand your concern, I believe I implicitly took that into account. That’s the reason I have the third field (Statutory Contributions). For instance, if say you make a monthly contribution to the Local Authorities Superannuation Fund and input that amount in that field, you should get the desired result(s). NAPSA is mandatory while these auxiliary contributions are optional and vary with different employers. Let me know if this does NOT give the desired result so we can work on it.

  • MBwalya

    How much tax for a basic of 15000

    • http://lightonphiri.org/ Lighton Phiri

      MBwalya

      NAPSA ………. ZMW 255.00
      PAYE ………… ZMW 3,925.75
      Net Income … ZMW 10,819.25

      You could also experiment more with the PAYE calculator on the page. I hope this helps.

      • Andy

        Hi Lighton. This cannt be correct Put in your calculatoe and the values will differ.

        • http://lightonphiri.org/ Lighton Phiri

          Hello @Andy. Thank you for this. Indeed it is different. The results differ because I made a change on November 3, 2014—you will notice that example in post has changed as well—to align computations with the most recent NAPSA 2014 Ceilings [1].
          You will have noticed that I am now using a maximum ceiling value of ZMW 792.05.

          I would really appreciate it if you could let me know if the current computations are now in line with the figure(s) on your payslip—this is the only way I would be able to make appropriate changes.

          [1] http://goo.gl/WgVk6W

  • Eliana C. Siwila

    My BASIC PAY IS 2000
    AND I GET COMMISSION FROM SALES I MAKE, DO I NEED TO PAY TAX ON COMMISSION?

  • Eliana Chisha Siwila

    My BASIC PAY IS 2000
    AND I GET COMMISSION FROM SALES I MAKE, DO I NEED TO PAY TAX ON COMMISSION?

    • http://lightonphiri.org/ Lighton Phiri

      @elianachishasiwila:disqus By law, yes. All cash benefits paid in the form of allowances are taxable.

  • joe

    Hi,
    This is how i understand the payroll. correct me if am wrong.
    Basic pay K4,000
    Napsa allowable K255
    Taxable amount K3,745
    Total tax K186.25
    At this stage do we stil charge 5% of the K4,000 and deduct it from
    the K4,000. Joe

    • http://lightonphiri.org/ Lighton Phiri

      @joe Yes, you are correct, except for the 5% part—I am actually struggling to make out where the 5% is coming from.

  • Oliver

    please help me calculate for my net gratuity my annual income is 29800 and gratuity term was 5 years

    • http://lightonphiri.org/ Lighton Phiri

      @Oliver According the latest ZRA practice note (No. 1/2014) [1], if the ZMW 29,800 is your qualifying gratuity, it will NOT be taxed and you should get that entire amount.

      Use that money wisely brother ;^)

      [1] http://goo.gl/f5spij

  • galamukani

    please help how much is my net pay if my gross of K 10400?

    • http://lightonphiri.org/ Lighton Phiri

      @galamukani Your net pay will be ZMW 7,829.25. You can see a detailed breakdown of your gross income using the form in the post.

    • galamukani

      Thank you very much but how do i access the breakdown calculations?

      • http://lightonphiri.org/ Lighton Phiri

        @galamukani In the post above, when you enter the ZMK 10,400 into to the field ‘Basic Pay’ the form will automatically compute relevant values. Using the ZMK 10,400 value, the following are the corresponding results

        NAPSA ……………………. ZMW 255
        Taxable Amount ………. ZMW 10,145.00
        Total Tax Deductions … ZMW 2,315.75
        Net Income ………………. ZMW 7,829.25

  • John Ndhlovu

    Hello Mr. Phiri! With a basic of K 29,516.02 what would be the net pay if NAPSA is 792.05. And is it supposed to be this amount for NAPSA?

    • http://lightonphiri.org/ Lighton Phiri

      Hello MR. @johnndhlovu:disqus ! A million thank you for this. I just updated the calculator to reflect the latest 2014 Ceilings [1].

      With that basic salary, the computations would be as follows:
      NAPSA …….. ZMW 792.05
      NET ………… ZMW 19,905.58

      If you could help confirm that these figures match with those on your payslip, I’d really appreciate it. Then I could make appropriate changes if required—I rarely get feedback from people using this calculator.

      Thank you again.

      [1] http://goo.gl/WgVk6W

  • Mwape kangwa

    Please help me,my salary is k12.500 what would be NAPSA?

    • http://lightonphiri.org/ Lighton Phiri

      @Mwape Kangwa, You could use the form above :) Your breakdown is as follows

      NAPSA …… ZMW 625
      PAYE ……… ZMW 2,921.25
      NET ……….. ZMW 8,953.75

  • maggie

    please help my gross pay is 1800.00 how much is napsa gross pay ytd, taxable ytd,freepay ytd

    • http://lightonphiri.org/ Lighton Phiri

      @maggie That gross amount falls within the tax exception band—see above. Using the form, you could easily extrapolate the values by multiplying by 12.

      NAPSA ……….. ZMW 90 (YTD: ZMW 1,080)
      Taxable ………. ZMW 1,710.00 (YTD: ZMW 20,520)
      Take Home …. ZMW 1,710.00 (YTD: ZMW 20,520)

  • OZC~Chronicles

    how do you calculate statutory deductions for expatriate hires? Example indian hire USD 4700 net pay

    • http://lightonphiri.org/ Lighton Phiri

      @ozcchronicles:disqus Statutory deductions for all employees (local and otherwise) is done exactly the same way [1]—as above, unless if company expatriate will be working for is an international company.

      You deduct 5% from empoyee, but remit 10% to NAPSA [2].

      I am not very sure how earnings in foreign currency are handled, however, seeing as everything is quoted in ZMW on the NAPSA Website [3], I would imagine you would have to convert employee’s gross salary into its equivalent ZMW value before computing statutory deductions. That said, you would have to contact NAPSA to find out the specifics.

      I hope this helps?

      [1] http://goo.gl/mq5Xfi
      [2] http://goo.gl/rdMl54
      [3] http://www.napsa.co.zm

  • Jeff

    Are temporal employees getting less than 3000 subject to PAYE

    • http://lightonphiri.org/ Lighton Phiri

      @Jeff No, ZMW 3,000 is within tax exception band—anything less than ZMW 3k, after statutory contributions are deducted, is non-taxable.

  • rich

    what is the total maximum napsa contribution

    • http://lightonphiri.org/ Lighton Phiri

      @rich The total maximum NAPSA contribution is ZMW 1,584.10, with employee and employer split up contribution evenly; implying that an employee is currently required to pay up to a maximum of ZMW ZMW 792.05.

      Please see this [1] memorandum for details.

      [1] http://goo.gl/WgVk6W

  • Mr B

    Hello Mr Lighton…I might not have understood your formula well but i think there is an error in the third slab (3,800.01 to 5900 @ 30%). I think it should be (3,800.01 to 6700 @ 30%). The 30% tax is K2900 as to my understanding..

  • Mr B

    Ok, I understood K5900…i checked it out through one of the ref…apologies…

    • http://lightonphiri.org/ Lighton Phiri

      Glad it all makes sense now.

  • mr michael

    hello mr Lighton… am failing to under stand some thing. i have a gross pay of 10500 hence my napsa is 525 right? the remaining amount is 9975 of which the first 3000 is not taxed. meaning my taxable amount is 6975. of which 35% of that is 2441.25 if use my calculator, but am getting a different figure as compared to the calculator above when i punch in 10500. why the difference? please enlighten me as to why. thank you

    • http://lightonphiri.org/ Lighton Phiri

      Hello @mr michael… Tax is computed in bands; that taxable amount (ZMW 9,975) is broken down and appropriate deductions made to applicable bands. Here is how…

      STEP#1: 3000@ 0% (ZMW 0 tax) leaving 6975
      STEP#2: 799,99 (3000.01 to 3800.00)@ 25% (ZMW 200 tax) leaving 6175.01
      STEP#3: 2099.99 (3800.01 to 5900.00)@ 30% (ZMW 630 tax) leaving 4075.02
      STEP#4: 4075.02@ 35% (ZMW 1426.26)

      Total tax: (200 + 630 + 1426.26) => ZMW 2256.26

      I hope this helps.

  • Jacob Chisola

    Hi Mr. Phiri,help me understand,my gross pay is 9,000.00,Napsa is 450.00.My Paye as calculated for me by the accountant is 1,825.75 and my net pay is 6,724.25.If i follow your formula, my Paye is 1,757.5 and my net is 6,792.5.I have seen that he removes a 255.00 from the gross pay before doing the computation and he tells me that this is a constant.My other question is on Napsa and Paye on the Gratuity,Is this supposed to be deducted.

    • http://lightonphiri.org/ Lighton Phiri

      Hello Mr. @Jacob Chisola, Firstly, thank you very much for your comment, it is people like you that make it possible for content here to be up to date; I am also glad you seem determined to follow this up and get to the bottom of things…

      1. To the best of my knowledge, the formula above is accurate; you can in fact compare it with the 2015 official NAPSA Social Security Contributions Table (see Page 9 of 26) [1].
      * Are you able to share detailed breakdown of your deductions—if possible, kindly send this information through as soon as you can? Perhaps there might be something I omitted from the calculator about…
      * Could it be that you have a company policy that mandates all employee to subscribe to a trust fund?
      * I would follow this up with your accountant if I were you… point him to the latest 2015 Contribution Ceiling [2]. Of course, I would be VERY interested in hearing what comes out of your next interaction with your accountant.

      2. Yes, NAPSA (see Page 1 of 26) [1] & PAYE [3] is applicable on emoluments; this is inclusive of gratuity earnings.

      I hope this helps.

      [1] http://goo.gl/yXutii
      [2] http://goo.gl/fkMqA5
      [3] http://goo.gl/JFGNfd

    • Jacob Chisola

      Thank you Mr.Phiri,I will get back to you after i have a discussion with him.There is no trust fund to which we contribute.
      Regards
      Jacob.

  • lisa phiri

    Dear Sir,
    My name is Lisa.my basic pay is k5,962 housing k1,789 and transport k500.i am meant to receive gratuity of one month salary how much should I get and what tax will I pay as PAYE and what amount will I pay as NAPSA ?I will really appreciate your help.
    Regards
    lisa

    • http://lightonphiri.org/ Lighton Phiri

      Dear Madam (@lisa phiri),
      My name is Phiri:)
      1. You will get a total of ZMW 7,838.45 (see explaination and links below)
      * No tax on that amount—it is within the 0% band
      * NAPSA will be computed normally—ZMW 412.55
      2. You will pay ZMW 0.00 as PAYE
      * Qualifying gratuity is within 0% band
      3. NAPSA will be ZMW 412.55

      ## A few things to note about taxation on gratuity:
      1. There are two qualifying gratuity bands. Please see latest practice notes [1]
      * First ZMW 36,000.00@ 0%
      * Above ZMW 36,000.00@ 25%
      2. Qualifying gratuity is defined as follows:
      * contract duration not less than two years
      * gratuity amount NOT more than 25% of basic salary during employment period

      [1] http://goo.gl/f5spij

  • Newton

    Hi
    This is great work Mr Phiri.I have a question,if i contribute to my an in house pension scheme(e.g 5% of my gross pay and my employer contributes 10%) does my contribution fall under statutory contribution?

    • http://lightonphiri.org/ Lighton Phiri

      @Newton; Yes! if the in-house pension scheme is a registered legal entity—which is almost always the case—the 5% falls under statutory contributions; 5% will be deducted from gross, together with NAPSA, before PAYE is computed.

  • Newton

    Thanks Lighton

  • Newton

    I just had a thought,is there a ceiling to private pension contribution?This is related to my earlier post.What would be my net pay if my salary is 20,000 ZMW with me contributing 10% to private pension scheme?

    • http://lightonphiri.org/ Lighton Phiri

      @Newton; Indeed there is—the current ceiling is ZMW 1860.00. The ‘Approved Fund’ deductions are detailed in PART IV of ITA [1]; the 2009 ITA amendment [2]—the latest ammendment I have access to—ascribes a cap of ‘fifteen per centum’ of emoluments or ZMW 1860 (rebased!), whichever is less.

      Your Net pay would ZMW 14,368.47—it would be computed as follows:
      * NAPSA deduction: ZMW 796.20
      * Private pension: ZMW 1,860.00 *** (10% of your gross is over ceiling…)
      * Taxable amount: ZMW 17,343.80
      * PAYE deduction: ZMW 4,835.33
      * Net income: ZMW 14,368.47

      Are you certain you are contributing 10% to the private pension fund or could it be the case that you are contributing 5%, with the other 5% contributed by your employer?

      [1] http://goo.gl/BN6WfM
      [2] http://goo.gl/MQKULE

  • Newton

    Yes I am certain its 10% and employer contributes 20%.Thanks again

    • http://lightonphiri.org/ Lighton Phiri

      You have a very considerate employer :) The closest I ever came was 5% contribution towards a company registered trust fund—my then employer contributed an equivalent 5%…

  • Kristine

    Hi, what qualifying gratuity means? Who is qualifying for it? What shortest period of work can gratuity be paid?

    • http://lightonphiri.org/ Lighton Phiri

      @Kristine;
      1. What is qualifying gratuity mean?
      Qualifying gratuity is defined [1, 2] as one that meets the following conditions:
      * Paid upon termination of a written contract
      * Contract duration is NOT less than two years
      * Is NOT more than 25% of the basic salary earned during period of employment

      2. Who is qualifying for it?
      * Anyone whose employment contract meets the three conditions above

      3. What is shortest period of work can gratuity be paid?
      * The minimum period is two years

      [1] See latest ZRA practice notes
      [2] http://goo.gl/f5spij

      • http://lightonphiri.org/ Lighton Phiri

        @disqus_jX7QCRqSSp:disqus; @Newton pointed out [1] a flaw in my response to your last question (What is the shortest period of work can gratuity be paid?). I misrepresented your question because I assumed all your questions were linked to ‘Qualifying Gratuity’.

        The two year minimum period is ONLY applicable to Qualifying Gratuity. There is no prescribed minimum period after which gratuity can be paid. This is NOT specified in the Employment Act [2] and is thus left at the discretion of the employer.

        [1] http://goo.gl/MEmLc9
        [2] http://goo.gl/XzUkjA

  • CWSimusokwe

    what is the standared calculation for leave days

    • http://lightonphiri.org/ Lighton Phiri

      @CWSimusokwe; Cash in lieu of leave are added to the salary and taxed normally under PAYE using the tax tables applicable to the month such payments accrues to the employee.

  • Joe

    Hi, my comment is in line with the earlier blogger named Newton. You have mentioned the amount of ZMW 1,860.were is this amount coming from??

    • http://lightonphiri.org/ Lighton Phiri

      Hello, @Joe. This is detailed in the Income Tax (amendment ) Act No. 1 of 2009 [1], albeit there could be recent acts superseding this; I have found none thus far. Incidentally, background information on this is in PART IV of the original ITA [2]—you might want to take a look at it if you need to understand this more.

      On page 4 of the amendment, pay particular attention to the verbatim text below:

      (3) The deduction to be allowed to an employee for a charge year in respect of the employee’s current contributions to approved pension funds shall not exceed—
      (a) fifteen per centum of the employee’s income from emoluments liable to tax which have been received for that charge year from any employer who established, adhered to or continued the said approved pension fund, the fifteen per centum to be calculated before any deduction under this subsection; or
      (b) one million, eight hundred and sixty thousand Kwacha; whichever is the less.

      [1] http://goo.gl/MQKULE
      [2] http://goo.gl/BN6WfM

  • Newton

    Hi Lighton,
    I was reading your response to Kristine,Isn’t gratuity paid on pro rata basis if the some one leaves an organisation before contract period elapses(e.g served LESS THAN 2 years) ?Though I know some organizations do state in the contracts how one qualifies for gratuity,however others are silent.

    • http://lightonphiri.org/ Lighton Phiri

      Hello @Newton, thank you for this.

      I literally misrepresented what @disqus_jX7QCRqSSp:disqus was trying to find out in question #3. I made the assumption all her questions were centred around ‘Qualifying Gratuity’—which is where the two years came from… I have since edited my reply on @Kristine’s comment..

      Whether gratuity is paid upon completion of one’s contract or let alone on a pro rata basis is left at the discretion of an employer, and as you rightly pointed out, this is usually indicated in one’s employment contract.

      Incidentally, the Employment Act [1] is silent about gratuity. An employer can legally decide NOT to pay gratuity; apply a standard percentage; or use a fixed amount.

      [1] http://goo.gl/XzUkjA

  • Sharon

    Does an employee get charged fringe benefit tax on interest free loans from an employer?

  • stone

    Hi there. my basic pay is 5000 and allowances are at 2750.
    am on a two year contract. talk to me…help me to calculate my PAYE as my payslip has some mistakes (also noted by the company accountant for 2 months now). I’ll really appreciate.. From Stone

    • http://lightonphiri.org/ Lighton Phiri

      Hello @stone; please see breakdown below.

      * Gross pay: ZMW 7,750.00 (basic pay+allowances)
      * NAPSA deduction: ZMW 387.50
      * Taxable amount: ZMW 7,362.50
      * PAYE: ZMW 1,341.88
      * Net income: ZMW 6,020.63

      • stone

        cheers mate.

  • Raphael Zulu

    hi Lighton,I would like to know by what % is payee calculated,e.g Payee for 7750 is 1341.88. please help because if i calculate 35% of 7750 it gives me 2712.5

    • http://lightonphiri.org/ Lighton Phiri

      @Raphael Zulu; PAYE is computed deductively, in bands. Your approach—applying that 35% of ZMW 7,750.00—assumes that the entire amount is taxable, neglecting the fact that:
      1. NAPSA MUST be deducted before applying tax bands
      2. Taxable amount MUST be segmented into applicable individual tax bands

      Here is how it ought to be done.

      ## STEP #1: Compute NAPSA
      * 5% of Gross amount (5% of ZMW 7750.00)
      * NAPSA deduction: ZMW 387.50

      ## STEP #2: Compute taxable amount
      * Gross amount less NAPSA (ZMW 7750.00 – ZMW 387.50)
      * Taxable amount: ZMW 7362.50

      ## STEP #3: Compute PAYE by applying individual tax bands
      The ZMW 7,362.50 is split into
      * (Band #1: 0000.00 – 3000.00) ZMW 3,000.00@ 0% -> ZMW 0.00
      * (Band #2: 3000.01 – 3800.00) ZMW 799.99@ 25% -> ZMW 199.9975
      * (Band #3: 3800.01 – 5900.00) ZMW 2099.99@ 30% -> ZMW 629,997
      * (Band #4: 5900.01 – 7362.50) ZMW 1462.49@ 35% -> ZMW 511.8715
      * Total PAYE = (Band1 + Band2 + Band3 + Band4) = ZMW 1341.866

      • http://lightonphiri.org/ Lighton Phiri

        @Raphael Zulu; One more minor issue:
        * The ZMW 0.01 (One Ngwee) difference is as a result of round off errors :)
        The script tied to the form above rounds off figures at every point.

  • Patrick MFD

    Good morning Sir,thank you for facilitating our understanding on the tax bands and others.
    i just wanna find out : Does the same taxation applicable for overtime? Regards.!

    • http://lightonphiri.org/ Lighton Phiri

      @Patrick MFD; Yes overtime allowances are also taxable. Incidentally, the latest ZRA—PRACTICE NOTE No.1/2015 [1] has a section with earnings that are exempt from taxation; see excerpt below.

      20.1 EMOLUMENTS THAT ARE NOT SUBJECT TO PAYE

      The following emoluments are exempt or otherwise not chargeable to income tax and, consequently, need not be included in the taxable emoluments.

      (i) Ex – Gratia Payments: A voluntary, non – contractual, non – obligatory payment made by an employer to the spouse, child or dependant of a deceased employee is exempt (Paragraph 7 (t) of the 2 Schedule to Income Tax Act).
      (ii) Medical Expenses: Medical expenses paid or incurred by an employer on behalf of an employee or refunds of actual medical expenses incurred by an employee are exempt (Statutory Instrument No. 104 of 1996).
      (iii) Funeral Expenses: Funeral expenses paid or incurred by an employer on behalf of an employee are exempt (Statutory Instrument No. 104 of 1996).
      (iv) Sitting Allowances for Councillors: Payments by Local Authorities to Councillors as Sitting Allowances are exempt [Paragraph 7(s) of the 2 Schedule to Income Tax Act].
      (v) Labour Day Awards Labour Day awards paid to employees either in cash or in kind are non-taxable.

      [1] http://goo.gl/f5spij