Introduction
This is a method of collecting taxes at source which was introduced to make payment of taxes convenient both to the tax payer and to the government. It also reduces the collection costs and minimizes chances of tax evasion.
A person who makes a payment of, or on account of, any income which is subject to withholding tax shall deduct tax there from as per the specified rate and
- Remit the tax deducted to the DTD by the 20th day of the following month and for PAYE by the 9th day of the following month.
- Pay the payee net of withholding tax
- Furnish the payee with a certificate showing the gross amount paid, the total tax deducted and such other particulars as the Commissioner may require.
- Keep a record in respect of, name of payee, Personal Identification Number (PIN), gross amount paid, nature of payment and amount of tax deducted.
At the end of the year the person will be assessed on the gross income but a credit will be given as a set-off for all taxes paid in advance, except in those cases where WHT is a final tax. A set-off tax must be made in the same year in which the deduction took place.
Illustration
Highlight two advantages and two disadvantages of taxation at source method to both the revenue authority and the taxpayer (8 Marks)
