THE National Assembly last evening approved the Income Tax (Amendment) Bill No. 8 of 2015 and the confirmation of the Customs Duties (Amendment of First Schedule) Order No. 10 of 2015, to facilitate measures in the recently approved $181.7B National Budget. The Income Tax (Amendment) Bill No. 8 of 2015 seeks to amend section 16 (1) of the Income Tax Act to provide that in ascertaining the chargeable income of a person, there shall also be deducted the National Insurance Scheme (NIS) contributions made by an employee. The amendment increases the nine areas of deductible allowances for Income Tax purposes to ten.
Speaking on the Bill before it was passed, Minister of Finance Winston Jordan, explained to the House that the Bill seeks to reinstate a benefit that was previously enjoyed but that was inadvertently taken away by the present regressive flat tax system.
“Not only is this contribution critical to employees in the working and non-working life, but it is also an important source of financing and savings for the Government. This measure continues our quest to provide the good life for all Guyanese by giving back to them, putting more monies in their pockets,” Minister Jordan stated.
The Minister explained that this is among the list of pro-poor measures his Administration is putting in place to relieve the burden on the ordinary citizens.
“Let’s assume that someone is earning $60,000 at the moment, they will be given a free pay of $50,000 per month that leaves chargeable income of $10,000. Now they will be asked to pay 30% (PAYE) of that $10,000 which is $3000, and also asked to pay $3,360 per month as NIS contribution; so in essence their take home pay will be $53, 640,” Minister Jordan explained.
He went on further to explain, “The same individual earning $60,000 will be given free pay of $50,000, that leaves $10,000; but also the $3,360 paid in NIS contribution for the month would also be deducted from the $10,000, so that would leave a chargeable income of $6,640, and 30% of that is $1,992, giving this person a take home pay of $54,648.” This means the person has an additional $1,008 per month or $12,096 per year.
Minster Jordan advised that this takes effect immediately. The Commissioner General of the Guyana Revenue Authority (GRA) will soon issue guidelines for refund of monies paid up to August 2015.
“He will issue also guidelines on how to make the appropriate adjustments so that you start enjoying your benefits and I know that it will come in handy for the Christmas,” the Finance Minister said.
Yesterday’s sitting of the National Assembly was the last before the Assembly goes into recess from September 10 to October 10, 2015.