As a salaried employee in Kenya, navigating your payslip can feel overwhelming. A significant portion of your deductions goes towards PAYE, a system where employers withhold income tax before remitting it to the KRA. Therefore, let’s break down a sample payslip belonging to one Mr.Kamau Iria to illustrate how your pay slip will look with the deductions. Below is a table breakdown of the deductions from a payslip of Ksh95000.
1.Sample Payslip Breakdown
| Description | Amount (Ksh) |
|---|---|
| Basic Pay | 95,000.00 |
| NSSF | -2,160.00 |
| Taxable Pay | 92,840.00 |
| Income Tax | -22,635.36 |
| Insurance Relief | +240.00 |
| AHL Relief | +213.75 |
| Personal Relief | +2,400.00 |
| PAYE | -19,781.61 |
| NHIF | -1,600.00 |
| Housing Levy | -1,425.00 |
| Net Pay | 70,033.39 |
2.Breakdown of a Sample Payslip
- Basic Pay is Ksh 95,000.00. This is your total salary before any deductions are applied.
- NSSF deduction is Ksh 2,160.00. This is your mandatory contribution to the National Social Security Fund, a social security program.
- Taxable Pay is Ksh 92,840.00. We arrive at this figure by subtracting your NSSF contribution from your basic pay. This amount forms the basis for calculating your income tax.
- Income Tax is Ksh 22,635.36. This represents the tax calculated on your taxable income based on the established PAYE tax bands.
3.Understanding PAYE Calculations
Next, the income tax amount is further adjusted for reliefs before arriving at your final PAYE deduction. Here’s how these reliefs impact your tax bill in our example:
- Insurance Relief: Ksh -240.00. Fortunately, this reduces your taxable income by a predetermined amount.
- AHL Relief: Ksh -213.75. Affordable Housing Relief offers tax relief on your contribution to the housing levy.
- Personal Relief: Ksh .2,400.00 . This is a basic tax-free allowance granted to all taxpayers.
4.Calculating Your Final PAYE Deduction
Hence, lets calculate your final PAYE deduction by subtracting the reliefs from your income tax.
- PAYE: Ksh 19,781.61 (Ksh 22,635.36 Income Tax) – (Ksh -240 Insurance Relief) – (Ksh -213.75 AHL Relief) – (Ksh -2,400 Personal Relief)
5.Reaching Your Net Pay
Furthermore, let’s factor in other mandatory deductions.
- NHIF: Ksh 1,600.00 – This is your contribution to the National Hospital Insurance Fund, which provides healthcare coverage.
- Housing Levy: Ksh 1,425.00 – This is your contribution towards affordable housing initiatives.
Finally, we can determine your net salary by subtracting all deductions from your basic pay.
- Net Pay: Ksh 70,033.39 (Ksh 95,000 Basic Pay) – (Ksh 19,781.61 PAYE) – (Ksh 2,160 NSSF) – (Ksh 1,600 NHIF) – (Ksh 1,425 Housing Levy)
6.Conclusion:
In essence, understanding your payslip empowers you to manage your income effectively. This breakdown clarifies how PAYE and other contributions affect your final take-home pay.