Personal Income Tax (PIT)

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GRA⋅Domestic Tax⋅Personal Income Tax (PIT)

Personal Income Tax (PIT)

It is a tax charged on an individual’s total income (income from employment, business and investment). You must pay Income Tax if you are an employee, a sole proprietor or a person in partnership and you earn income above GH¢ 402 per month.

The Government of Ghana introduced the Income Tax Act, 2015 (Act 896), to provide for the imposition of income tax and other related purposes.

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Imposition of Income Tax

A person is liable to pay income tax on their chargeable income or on final withholding payment received during the year of assessment. Income tax is payable by applying the relevant rates. A person is allowed a deduction for foreign tax credit.

Chargeable Income

Chargeable income is made up of income from employment, business or investment less any allowable deduction. Chargeable income from each source of income is determined separately.

Assessable Income

Assessable income is income of a person from any employment, business or investment. A resident person’s assessable income is that person’s worldwide income from all sources. A non-resident person’s assessable income is that person’s income from Ghana. The assessable income of a non-resident person, who has a permanent establishment in Ghana is the income of the permanent establishment. Income has its source in Ghana if the income is accrued or derived in Ghana.

Income from Employment

An individual’s employment income is the gains and profits from the employment for the year or during the year. This includes salary, wages, leave pay, fees, commissions, gratuities, overtime pay, bonuses and other benefits and allowances paid in cash or given in kind.

The following are excluded from the calculation of employment income:

Final withholding payment;
Discharge or reimbursement of an expense incurred by an individual, on behalf of the employer that serves the proper business purposes of the employer;
A discharge or reimbursement of the dental, medical or health insurance expenses of an individual, where the benefit is available to each full-time employee on equal terms; and
Redundancy pay, among others.

Income from Business

A person’s business income is the gains and profits from that business for the year or during the year. This includes:

Service fees, consideration received in respect of trading stock, a gain from realisation of capital assets and liabilities of the business;
An amount derived as consideration for accepting a restriction on the capacity, of the person to conduct the business;
A gift received by the person in respect of the business; and
Any amount derived that is effectively connected with the business, that would otherwise be included in calculating a person’s income from an investment, among others.

The following are excluded from the calculation of business income:

Exempt amounts;
Final withholding payment; and
Any amount included in the calculation of a person’s employment income.

Income from Investment

A person’s investment income is the gains and profits from the investment for the year or during the year. This includes:

Dividends, interest, annuity, natural resource payment, rent and royalty;
A gain from the realisation of an investment asset;
An amount obtained as consideration for accepting a restriction on the capacity of the individual to conduct the investment; and
Any gift received in respect of the investment among others.

The following are excluded from the calculation of investment income:

Exempt amounts;
Final withholding payment; and
Any amount included in the calculation of a person’s income from employment or business.

Income from other sources such as income from Employment, Business and Investment are put together at the end of the year and taxed as one.

You have to file a return at the end of the year.

Relevant PIT Downloads and Services

Downloadable Forms for Personal Income Tax

File and Pay Personal Income Tax (PIT)