Is Overtime Allowance Taxable

Is Overtime Allowance Taxable Following the enactment of Finance Act 2020 tax exemption on bonuses overtime allowance and retirement benefits for employees whose salary does not exceed the lowest tax bracket is no longer applicable

Kenya Revenue Authority KRA has started a crackdown on firms under declaring their payrolls in what will see employees pay taxes on items like overtime leave pay and per diems previously not subjected to the 30 percent Pay as You Earn PAYE An allowance is totally exempt or is taxable after it exceeds a certain amount Since the enactment of the Finance Act in 2020 all overtime bonuses and retirement benefits are exempted from tax as long as the total income does not exceed the lowest tax bracket

Is Overtime Allowance Taxable

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Bonuses overtime allowance and retirement benefits paid are tax exempt where they are paid to an employee whose salary before the bonus and overtime allowance does not exceed Kshs 11 180 p m This is effective from 1st July 2016 Contributions paid by a tax exempt employer to an unregistered pension scheme or excess contributions paid to a registered pension scheme provident fund or individual retirement fund are taxable benefits Furniture is equal to 1 of the cost to the employer If hired the cost of the hire should be brought to charge

Overtime Pay Normally the official working hours in Kenya are from 8 am to 5 pm from Monday to Friday If there is extra work that needs to be done an employee or director may report to work before 8 am or stay behind after 5 pm The employees are entitled to overtime pay Tax free remuneration i e payment of employment tax by an employer on behalf of the employee gives rise to a taxable benefit Where an employer pays passages for an expatriate employee or reimbursement of tickets cost for passages to any place outside Kenya this is not treated as a taxable benefit

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Kenya Revenue Authority is an agency of the government of Kenya that is responsible for the assessment collection and accounting for all revenues that are due to government in accordance with the laws of Kenya In its analysis audit firm KPMG notes that extra income earned from bonuses overtime may be subjected to taxation and also not spared is the income from retirement benefits

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Following the enactment of Finance Act 2020 tax exemption on bonuses overtime allowance and retirement benefits for employees whose salary does not exceed the lowest tax bracket is no longer applicable

Get More Here!!

KRA Wants Per Diem Overtime And Other Employee Allowances

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Kenya Revenue Authority KRA has started a crackdown on firms under declaring their payrolls in what will see employees pay taxes on items like overtime leave pay and per diems previously not subjected to the 30 percent Pay as You Earn PAYE

Get More Here!!