Question

Mr. Kimutai a teacher from Tuiyotich Secondary School earns K₤ 12000 per annum and lives in a house provided by the employer at a minimum rent of Ksh.2000 per month. He gets a family relief of K₤ 1320p.a. and is entitled to a relief of 10% of his insurance of K₤ 800p.a.

1. Calculate his annual tax bill based on the table below. 
   Income slab in K₤ p.a.              Rate
      1 – 2100                               10%
   2101 – 4200                            15%
   4201 – 6300                            25%
   6301 – 8400                            35%
     Over 8400                              45%
2. Kimutai other deductions include.
   • W.C.P.S = sh 600.00pm
   • NHIF = sh 500.00pm
     Calculate Kimutai’s net salary monthly.

Answer 1

1.  

   Income slab in K₤ p.a.	Rate	Tax in ₤
   1 – 2100	10%	210
   2101 – 4200	15%	315
   4201 – 6300	25%	523
   6301 – 8400	35%	735
   Over 8400(12600−8400−4200)  Gross tax.	45%	1890  3675

   Taxable Income = 12000 + 15% of 12000 − rent
   115 × 2000 − 1200
   100
   =₤12,600 p.a 
   Net tax = 3675 − 1320 − 80
   = ₤2275
2. Net salary p.a = 12600 − (₤2275 + 360 + 300)
   =₤9665 p.a
   = 9665 × 20 
           12
   =Sh. 16,108