A resident individual with taxable income is entitled to a personal relief of Kshs. 1,162 per month (i.e. Kshs. 13,944 per annum). This is a uniform relief and employers are advised to automatically grant personal relief to all employees irrespective of their marital status.
Individuals serving several employers qualify for personal relief from only one employer (i.e., main employment).
A resident individual shall be entitled to insurance relief at the rate of 15% of premiums paid subject to maximum relief amount of Kshs. 5,000 per month (or Kshs. 60,000 per annum) if he proves that;-
- He has paid premium for an insurance made him on his life, or the life of his wife or of his child and that the Insurance secures a capital sum, payable in Kenya and in the lawful currency of Kenya; or
- His employer paid premium for that insurance on the life and for the benefit of the employee which has been charged to tax on that employee; or
- Both employee and employer have paid premiums for the insurance:
- No relief shall be granted in respect of part of premium for an insurance which secures a benefit which may be withdrawn at any time at the option of the insured.
- Premiums paid for an education policy with a maturity period of at least 10 years shall qualify for relief.
- Only premiums paid in respect of an insurance policy taken on or after 1st January,2003 shall qualify for relief.
Abdi Karimi is an employee of Tumaini Bank ltd. During the year of income 2016, he received the following benefits.
- Basic salary sh. 120,000(p.m) PAYE(36,000)
- BONUS SH. 220,000
- He is a member of the company’s registered pension scheme where he contributes 7.5% of his basic pay. The employer contributes an equal amount.
- The employer pays sh. 15000 pm to jubilee insuarance co. He pays an equal amount towards the same.
- He contributes sh. 7000 pm to a registered home ownership savings plan and sh. 2000 pm to kenya banker’s Sacco
Determine his net tax liability.