What is Individual Income Tax?

• It is a tax imposed on an individual’s taxable income. For instance if a sole trader makes taxable income or profit as prescribed by the law for the specific year of assessment, the applicable rates must be used to determine tax payable on individual’s income.

Who should register for an individual income tax?

The following should register for individual income tax:

• Employees,

• Partners,

• Sole Traders,

• Directors,

• Members etc.

An individual who derives income in Lesotho is expected by law to file an income tax return and pay tax due in Lesotho.

 

How is Individual Income taxed?

According to the act taxable Income of an individual is taxed in accordance with progressive two rate structure of 20% and 30%. These rates are subject to change according to amendment by the parliament.

The amount of tax structure for the financial year 2022/2023 is as follows:

• Any chargeable income from M 1.00 to M 69, 120.00 or less per year is taxed at the rate of 20%

• Any amount in excess of M69, 120.00 is taxed at the rate of 30%

 

Tax Credit

The law provides for an individual to be granted a non-refundable tax credit. A tax credit is a rebate or relief granted by law to individuals who made taxable income for the year of assessment. It is directly deductible from the amount after applying the applicable marginal tax rates to the chargeable income. The non-refundable tax credit is currently M 10, 824.00 per year.

 

Example of tax calculation

Example 1:

Suppose that the business makes profit of M69, 120.00 per year.

Tax Calculation

M69, 120. 00 is taxable at the rate of 20%                                               = M 13, 824. 00

Less Tax Credit                                                                                      = M 10, 824.00

Total tax due/payable                                                                              = M 3, 000.00

 

Example 2:

Suppose a business makes a profit of M100, 000.00 per year

Tax Calculation

The first M 69, 120.00 is taxable at the rate of 20%                             = M 13, 824.00

The balance M 30, 880.00 is taxable at the rate of 30%                        = M 9, 264.00

                                                                                                             = M23, 088. 00

 

Less Tax Credit                                                                                  = M 10, 824.00

Total tax due or payable                                                                      =M 12, 264. 00

 

Where can I access an individual income tax return form?

The individual income tax return is obtainable  on the RSL website:

 

• Interim E-filing Solution under E-Services. Complete only those parts of the form that apply to you. 

What are the steps for filing Individual income Tax Return?

• Obtain a copy of Individual Income Tax Return form (S. 128 I). Complete only those parts of the form that apply to you. Be sure to read the line instructions for guidance.

• Attach financial statements which indicate business Income and Expenses.

• Sign the Declaration of Taxpayer or Representative on page 7.

• If you paid a person to prepare your tax return, be sure he or she also signs the Declaration of Paid Preparer.

• Submit the return and pay tax due on or before due date.

 Note: If the business did not engage in any income earning activity for a specific financial year, attach the letter indicating reasons  why the business did not operate.

 

What is the due date for filling Income Tax Return?

All Clients must file a return of income for each year of assessment not later than 30^th June every year.

 

What are the consequences for failure to file and pay individual income tax when it is due?

The additional tax is imposed at 22% per twelve months for each of the following offences:

• Failure to file return.

• Late filing of return.

• Failure to pay tax when due.

• Late payment of tax due.

Additionally, please note that Under Section 175 (1) of income tax return failure to file is a criminal offence, punishable by fine or imprisonment.

Where can I pay my individual income tax?

• RSL Banking Hall Maseru,

• Standard Lesotho Bank ,

• Nedbank Lesotho , and

• First National bank