TSC clarifies high June PAYE deductions caused by payroll system error, not new tax

The Teachers Service Commission (TSC) has clarified that higher Pay As You Earn (PAYE) deductions reflected in the June 2026 payroll for teachers and secretariat staff were caused by the correction of a payroll system configuration error and not the introduction of any new tax.

In a statement, TSC said it had received concerns from employees over unexpected changes in their June payslips, which showed increased PAYE deductions compared to previous months.

The Commission explained that the issue emerged following the implementation of Section 7 of the Tax Laws (Amendment) Act, 2024, which amended the Income Tax Act to exempt employee contributions to the Affordable Housing Levy (AHL) Fund and the Social Health Insurance Fund (SHIF) from income tax.

To comply with the law, the Integrated Personnel and Payroll Database (IPPD) system was reconfigured to apply the new exemptions. However, during the reconfiguration process, an unintended anomaly occurred.

According to the Commission, National Social Security Fund (NSSF) contributions, which had already been correctly configured as tax-exempt, were inadvertently recaptured for tax relief purposes. This resulted in a duplicate application of tax relief on NSSF contributions for all TSC employees.

The anomaly was later identified during routine payroll system reviews, prompting immediate corrective action in the June 2026 payroll. As a result, PAYE deductions were adjusted to align with the correct tax computation as provided for under the law.

TSC emphasised that the adjustment was purely a correction of the payroll system and not the introduction of a new tax or additional deduction. It further noted that the correction was necessary to ensure accurate computation of PAYE going forward.