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Monies collectible by government is generally recognized as being very important because it constitutes a major source of revenue to government. In Nigeria, one source of revenue which many sees as vertical to the state government is the personal income tax deduction made from workers salaries. It is seen as occupying a significant position in revenue of the state government.

This study was conducted to survey the system of Internal revenue collection and enforcement procedures under the Personal Income Tax Act, 1993 and to identify the problems and difficulties encounter by the Revenue Service Department. It also propose to recommend new method of tax collection in order to enhance a secured and improved efficiency in tax administration.

In order to accomplish the objectives of the study as highlighted above, the researcher made use of a survey design through which primary and secondary datas were used.

The study discovered that Personal Income Tax is an important source of income to the state government. This study also discovered that there are certain factors such as non-documentation of economic activities and inability of tax authority to ascertain total income of tax revenue to be generated.


Finally, it was recommended among others that tax revenue should be geared towards social and economic development of the local government. Effort should be intensified on public enlightment and education to the tax payers in the need to pay tax.


TITLE PAGE                                                                                     i

DEDICATION                                                                                               ii

CERTIFICATION                                                                                         iii

DECLARATION                                                                                           iv

ACKNOWLEDGMENT                                                                               v

ABSTRACT                                                                                                   vi


1.0       INTRODUCTION                                                                             1

1.1       BACKGROUND OF THE STUDY                                     1-2

1.2       PURPOSE OF THE STUDY                                                            3

1.3       STATEMENT OF THE PROBLEM                                                4

1.4       PURPOSE OF THE STUDY                                                            5

1.5       SCOPE OF THE STUDY                                                                 5

1.6       LIMITATION OF THE STUDY                                                      5

1.7       DEFINITION OF TERMS                                                                6-7


2.0       LITERATURE REVIEW                                                                  8

2.1       GENERAL OVERVIEW                                                                  8-12


OF TAXES                                                                                         13

2.3       CANON OF TAXATION                                                                 14

2.4       PERSONAL INCOME TAX                                                            15

2.5       CHARGEABLE INCOME OR TAXABLE INCOME                   15

2.6       TAX RELIEF                                                                         16



TAX ASSESSMENT                                                                        17-18


RESEARCH METHOD                                                                    19

3.1       INTRODUCTION                                                                             19

3.2       POPULATION OF THE STUDY                                                    19

3.3       DATA COLLECTION INSTRUMENT                                          19

3.4       METHOD OF DATA ANALYSIS                                      20

3.5       TEST OF HYPOTHESIS AND INFERENCE                                 20


INTRODUCTION                                                                             21

4.1       PRESENTATION AND ANALYSIS OF DATA                21-32



5.1       SUMMARY                                                                                       33

5.2       CONCLUSION                                                                                  33

5.3       RECOMMENDATIONS                                                                  34

REFERENCES                                                                                  35

APPENDIX                                                                                        36-39




            Revenue as regards to companies and other business establishment is defined as the income that a company receives from its normal business activities, usually from the sale of goods and services to customers, so also is to Government. Government must generate income so as to finance her cost of administration and also in providing constitutional demanded responsibilities. There have been a considerable increase in the administration cost and development expenditure such as the capital invested on the constructions of roads, provision of equipment and other social and economic amenities the word “TAXATION” comes in as a result of the need for Government to generate revenue and to finance expenditures in the cause of its administration.

Taxation is a compulsory levy that the government of a country or its appropriate agency imposes on taxation persons, individuals, businesses and other bodies to allow the government provide money needed for running of government and to achieve other macro economic objectives and fiscal policies of the government.

The traditional purpose of imposing tax and taxation is to raise money to run the affairs of the government. However, recently, I have seen government and their agencies imposing taxes for some other purposes like; stimulating investment, reducing inflation encourage the purchase of local goods, discouraging the consumption of certain goods etc.

The simple fact that taxation is a company levy is not meant to be paid by all. These classes of people are called “taxation persons”. Personal income taxes for instance are levied on persons who earn income-up to certain amount and corporate taxes are imposed on those corporate entities that make profit from trade or business.

People are getting it all wrong by thinking that commensurate service should be sought from the government for the mere fact that she or he pays taxes. In as much as tax monies are meant to be used to carry out the functions of the government and this may include providing social welfare, protecting life and property, provision of good roads, quality health care, quality education etc. It is solely the discretion of the government to decide to place priority and on different thing entirely.

Citizens have no right to refuse paying tax for whatsoever reason. Failing to pay their taxes is regarded as tax aversion. And tax aversion is a criminal offence. The punishment for tax aversion varies from state to state and from country to country.

Personal Income tax, which is the subject matter of this project work, is defined as a tax levied on the income of a person (i.e an individual), an ordinary partnership, a non-juristic body of person and an undivided estate. In general, a person liable to personal Income tax (PIT) has to compute his tax liability, file tax return and pay tax, if any, according on a calendar year basis.

Emphasis shall be made on the PAYMENT scheme and the revenue generation of ILESHA as a case study.


It is important to re-emphasis that the main objective of ILESHA WEST LOCAL GOVERNMENT is the attainment of social, economic and even the general development of the society. The question therefore is, does the government receive as much as expected from the citizens through pay-as-you-earn tax in order to implement some of these policies.

In view of these, I decided to have the following as the purpose and objective of this study.

  1. To examine pay-as-you-earn tax as a source of revenue to Ilesha West Local Government.
  2. To determine the total revenue generated from this source.
  3. To determine the extent of its impact on the internally and total revenue generated from the local government.
  4. To find out whether the method and control procedure towards assessment and collection of tax revenue
  5. To examine the problem militating against effective income tax administration in the local government.


The nature and dimension of the problem of pay-as-you-earn tax in Ilesha, Nigeria is a worthy and appropriate area to look into.

Obviously, Nigerians does not respond favorably to the introduction of pay-as-you-earn tax simply because they believe that it is an avenue that through which government defraud them, thereby reducing their income. Apart from this, the determination of taxable person that is those individuals who are supposed to pay tax poses a lot of problem as it involves long procedures.

However, the major problem confronting pay-as-you-earn tax in Ilesha west, Osun state Nigeria can be summarized below.

  1. Inability of tax force laws
  2. Lack of adequate follows up of assessment of taxes paid by-tax payers.
  3. Lack of adequate seminar and programmers for taxable person on the importance of paying tax.
  4. False declaration of incomes by tax payers.
  5. High cost of taxation.
  6. Tax evasion.



Generally the purpose of any research project is to add to the sum total of knowledge of subject matter and application and to prefer possible solution to the new problem or to increasing problem in the area of study.

Also the purpose of this research project titled assessment of personal income tax in Ilesha West; Osun State, Nigeria is to examine the following.

  1. Brief history of tax system in Nigerian.
  2. Principle of taxation in Nigeria
  • Objectives of taxation in national development.
  1. Personal income tax.
  2. Pat as you earn tax



The research project is designed only to cover the administration and management of pay-as-you-earn tax as a major source of revenue to government at the local level.



This study is limited to the data gathered through the questionnaires, text books and news gathered. Other constrains in the course of this study id the time factor, knowledge or experience and most important is the financial strength which may likely reduce the quality of this project.


  1. ACCOUNTING PERIOD: this is the period for which the tax declared an income or loss.
  2. ACTUAL YEAR BASIS (AYB) OF ASSESSMENT: this is a basis where the income of the actual year is being assessed to tax.
  • APPEAL: a tax payer or corporate body can appeal by giving a notice of appeal on the body of appeal or state high court within 30days of receiving the notice of refusal by the board to amend the assessment.
  1. BASIS PERIOD: this is the period under focus in any year of assessment. It is the period of tax payer whose income is being assessed to tax basis period can either be PYB or AYB.
  2. EARNED INCOME: these are income derived from actual work done or services rendered e.g employment income, trading income, pension and director’s fees.
  3. INCOME TAX: an income tax is a tax levied on the financial income of persons, corporation, or other legal entities.
  • PRECEDING YEAR4 BASIS (PYB) OF ASSESSMENT: this is a basis where the income of the accounting period ending in the preceding year of assessment (YOA) is being assessed to tax in the YOA under consideration.
  • PROPERTY TAX: a property tax is tax imposed on property by reason of its ownership.
  1. TAX AVOIDANCE: this occurs when a tax payer takes a perfectly legal course to keep down the amount he has to pay in taxes.
  2. TAX EVASION: this is a criminal offence as it involves illegal means of reducing tax burden by making false returns or by deliberate omission of some source of income from tax returns.
  3. UNEARNED INCOME: income derived from investment such as rent, dividend, interest e.t.c.
  • TAX AUTHORITY: this is the body responsible for the administration, assessment and collection of taxes.



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