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Direct assessment is a means of tax collection. It is a process by which the assessable income of a taxable person(s) from all sources is being subjected to tax i.e; Gains or profit from any trade, business, profession or vocation Employment income i.e. income accrued to a person by virtue of and from his employment. It includes salaries, wages, fees, allowances or other gains or profit from any employment including compensations, bonuses, premiums, benefits or other perquisites allowed, given or granted by any person to an employee Gains or profits including any premiums arising from a right granted to any other person for the use or occupation of any property (e.g. rents, royalties); Dividends, interests and discounts; Annuities; Any profits, gains or other payments not falling within the preceding categories.
This is another form of Direct Assessment where taxpayers are required to make a return of their income and a self-assessment of what their tax liability should be and forward this with their cheque for the tax due to their respective tax offices or pay directly to the designated bank where it is receipted for and tax card issued. This system of taxation is subject to review, if the tax authority found out that the tax paid and income declared is not a true reflection of the financial status of such taxpayer.
Return of income are obligatory and mandatory, any contravention attracts penalty and fine. The taxpayer is normally allowed 90days from the commencement of the tax year within which to prepare and render the return which is a statement of his/her income of the preceding year and personal allowances claimed. Section 41 of Personal Income Tax Act (PITA).
A standardized tax form, income tax form for the return of income and claims for allowances and reliefs (form A) is provided by the tax authority for this purpose and in which the return must only be made. If there is substantial income from trading, it is advisable for the taxpayer to keep books and submit accounts which may, in the event be called for. On receiving the returns, the office will examine the form and the account and on discretion determine the tax payable by the taxpayer i.e. the tax authority is not bound to accept the return of income or the account submitted by the taxpayer.
Notices of assessment i.e. form L1 which is a notice of tax computation is thereby issued and sent to the taxpayer by the tax authority informing him/her of: Income derived All deductions and reliefs granted and Amount of tax payable On issue of this notice, the taxpayer has 30days to pay the tax assessed. An aggrieved taxpayer could object within 30 days of the issue to him/her of the notice of assessment, otherwise the assessment becomes final and conclusive and incontestable. The taxpayer will proceed and pay the assessed amount to the bank, collect his/her receipts and attach such to the electronic tax clearance certificate form (if any) collected from the tax authority or downloaded from the website and submit at the nearest authorized tax office for the process of the e-TCC card which will be ready for collection after 72hours.