With the March 31 deadline just hours away, many taxpayers across Nigeria remain uncertain about how to file their personal income tax returns and meet legal requirements.

Under the Nigeria Tax Act 2025, every individual earning income in the country is mandated to file an annual tax return, covering earnings from the previous year.

Earlier in January, the Minister of State for Finance, Taiwo Oyedele, urged Nigerians to comply with the deadline, stressing that both employers and individuals have obligations under the law. He noted that individual taxpayers must file their self-assessment, adding that compliance levels remain low.

He also clarified that employees cannot assume their tax responsibilities end once deductions are made from their salaries.

Below is a step-by-step guide to help taxpayers navigate the process:

1. Understand Your Tax Category

Personal Income Tax is administered by the State Internal Revenue Service in the state of residence, not state of origin.

For salaried employees, taxes are typically deducted through the Pay-As-You-Earn (PAYE) system. However, many states still require annual filing for record purposes, verification, and obtaining a Tax Clearance Certificate.

For self-employed individuals, freelancers, traders, and business owners, filing is compulsory, as they are responsible for declaring and calculating their taxes.

2. Obtain Your Tax Identification Number (TIN)

Before filing, taxpayers must have a Tax Identification Number (TIN), which serves as a unique identifier for tax activities.

The TIN can be generated online using a National Identification Number (NIN) or obtained through the Federal Inland Revenue Service or the relevant state tax authority.

3. Determine Your Total Income

Taxpayers are required to declare all income sources earned within the year, including:

Salaries and wages

Business or professional income

Freelance or consulting earnings

Rental income

Dividends and interest income

Foreign income (where applicable)

After calculating total income, allowable deductions and reliefs are applied to determine taxable income. Nigeria operates a progressive tax system, with the first ₦800,000 of taxable income taxed at 0%.

4. Prepare and File Your Return

Tax returns must include total income, deductions or reliefs, and tax payable.

Filing can be done online via the relevant State Internal Revenue Service portal or physically at designated tax offices. Taxpayers must file in their state of residence and provide accurate personal, employment, and income details.

5. Claim Reliefs and Deductions

Under the Nigeria Tax Act 2025 (effective January 1, 2026), the Consolidated Relief Allowance has been removed.

In its place, taxpayers who pay rent can claim rent relief, calculated as the lower of ₦500,000 or 20% of the actual annual rent paid, provided proper documentation is submitted.

Other deductions, such as pension contributions and National Housing Fund contributions, remain applicable but require supporting evidence.

The revised tax structure also maintains a zero-rate band on the first ₦800,000 of taxable income.

6. Submit Before the Deadline

The statutory deadline for filing personal income tax returns is March 31 each year.

Failure to comply may attract penalties, including fines and additional charges depending on the duration of default and state regulations.

Tax authorities advise early filing to avoid last-minute delays and technical issues on online portals.

7. Who Must File Tax Returns?

Even for employees under PAYE, filing may still be necessary in situations such as:

Earning additional income (e.g., rent or freelance work)

Running a business or professional practice

Having multiple income sources

Changing employers within the year

Self-employed individuals and those with mixed income streams are required to file returns.

8. Documents Required for Filing

To ensure a smooth process, taxpayers should prepare the following:

Tax Identification Number (TIN)

Valid means of identification

Payslips or income statements

Bank statements

Business or freelance income records

Evidence of deductions (e.g., pension, insurance)

Proof of rent paid (for rent relief claims)

Previous tax filing receipts (if applicable)

Accurate documentation helps prevent delays and disputes.

9. After Submission

After filing, taxpayers typically receive an acknowledgement from the State Internal Revenue Service.

Authorities may accept the return as filed or issue an assessment after review. Taxpayers have the right to challenge any assessment within the legally specified timeframe.

10. Why Compliance Matters

Filing tax returns is a legal obligation for all income earners in Nigeria. Beyond avoiding penalties, compliance is often required for accessing essential services such as government contracts, loans, and visa applications, which typically require a Tax Clearance Certificate.

As the deadline approaches, timely preparation and submission remain critical to staying compliant and avoiding unnecessary penalties. (The Nation)

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