47287914-Sri-Lanka-PAYE-Income-Tax-Tables.pdf

SRI LANKA INLAND REVENUE

2009 / 2010

P.A.Y.E. INCOME TAX TABLES

Applicable with effect from 01.04.2009

TAXES - FOR A BETTER FUTURE

2009 / 2010

P.A.Y.E. INCOME TAX TABLES

By virtue of powers vested in me under section 116 of the Inland Revenue Act,

No. 10 of 2006, I, S. Angammana, Commissioner General of Inland Revenue do hereby

specify the income tax tables set out in this publication, for the purpose of deduction in terms of

section 114 of that Act, for the year of assessment commencing on April 1, 2009.

I specify such income tax tables for every subsequent year of assessment unless other

tables are specified for such subsequent years.

S. Angammana

Commissioner General of Inland Revenue

03.03.2009

SRI LANKA INLAND REVENUE P.A.Y.E.

INCOME TAX TABLES AND INSTRUCTIONS FOR THEIR USE

APPLICABLE WITH EFFECT FROM 01.04.2009 º

Tax Table No. .1 Monthly Tax Deductions from Regular profits Tax Table No. .2 Rates for deductions of tax from Lump-sum-payments

Tax Table No. .3 Deduction of Tax from Once-and-for-all-payments

Tax Table No. .4 Rates for the deduction of tax from payments made to Non-citizen Employees in Sri Lanka < Tax Table No. .5 Annual Tax Table

Tax Table No. .6 Tax on Tax Rates

Rate for the deduction of tax from the remuneration of a Table No. . 7 Chairman or a Director or a non-executive Director of a Company, not included in the P.A.Y.E payroll.

1. The Employers are required to :

i. Keep in safe custody the documents relating to every payment made to employees. Whenever officers authorized by

the Commissioner General call for inspection such documents should be made available to them. (Sec. 119)

ii. Remit to the Commissioner General every PAYE deduction made during a month, not later than the 15th day of the

month immediately following. 9 Sec. 120(a).

iii. Issue to all employees the certificate of tax deduction on T 10, before the expiry of the 30th day of April of the month

immediately following. (Sec. 120 (b).

iv. Forward Annual Returns to the Commissioner General not later than 30th April every year. (Sec. 120 (d).

v. Be held responsible for recovery and/or remittance of taxes. Employers who fail to do so would be held personally

liable to pay such amount. (Sec. 124 (1).

vi. Pay in addition to the tax, a penalty of an amount not exceeding 50% of the tax, in case of a failure for recover and/or

remit the tax.

2. Please note that in the following circumstances, the tax referred to in the table 6 should be paid in addition to the tax

referred to in the tables 1,2,4 and 5.

i When an employer or any other person settles income tax of an employee, without it being deducted from his salary, or

ii Reimbursement (by the employer) of income tax already deducted and paid from employee’s salary.

3. Please contact the Deputy Commissioner PAYE or Secretariat, if it appears that in relation to any payment made to an

employee, no tax table given here is applicable; or if the employer requires any further clarification.

TAX TABLE NO. 1 Monthly Tax Deductions from Regular Profits

(All employees other than those non-citizen employees to whom Tax Table 4 applies)

01. Please apply this Table to deduct tax from regular profits from employment paid to every employee during a calendar month.

02. Regular profits from employment include :

(i) Wages, salary, commission, overtime pay, traveling allowances and other allowances, fees, pension or

such other profits from employment that arise or accrue in such pay period.

(ii) Payment on housing, conveyance, medical bills, insurance policies, electricity, telephone bills and

entertainment, etc.

(iii) any such payment or benefit provided by the employer to a member of the family or any other person.

03. Unless a direction is issued by the commissioner General of any officer authorized by him, no deduction should be

made from the profits from employment to apply this Table.

04. In computing the Tax Table, the following deductions have already been made:

(i) 8% from gross regular profits as contribution to an approved Provident fund.

(subject to a maximum of Rs. 6.250/- per month) and,

(ii) Rs. 25,000/- per month as personal allowance.

05. As regards any employee whose:

(a) total monthly regular profits from employment (i.e. profits as described in paragraph 2) is less than Rs.

25,000/-, but

(b) cumulative regular profits up to any moth during the year of assessment exceeds Rs. 300,000/- then make tax

deduction commencing from that month, in accordance with Tax Table No. 5.

Note :- Please apply Table No. 2, in every case, to deduct tax from lump-sum-payments.

Summarized Tax Table - Regular Profits from Employment

Monthly remuneration Tax 1. Monthly remuneration up to Rs. 27,184 - Exempt

2. Monthly remuneration exceeding Rs. 27,184 but not - 4.6% of monthly remuneration less

exceeding Rs. 63,406 Rs. 1,250

3. Monthly remuneration exceeding Rs. 63,406 but not - 9.2% of monthly remuneration less


4. Monthly remuneration exceeding Rs. 78,125 but not - 10% of monthly remuneration less










9. Monthly remuneration exceeding Rs. 256,250 - 35% of monthly remuneration less

Rs. 48,437

TAX TABLE No. 2 Rates for the Deduction of Tax from Lump-sum Payments

How to use this table:

01. Bonus, Leave encashment etc., generally paid annually are considered as Lump-sum-payments.

02. This Table No. 2 comprises 24 parts, numbered from “M ½” to “M 12”. M ½ is the part that applies if the amount of

lump sum payments is ½ times the average monthly profits from employment. Similarly, “M 3½” is the part that

applies if the amount of lump sum payments is 3½ times of that average and; so on.

03. Follow the following steps to compute the tax on Lump-sum-payments, in relation to an employee:

(i) Divide the amount of lump-sum-payments (including any lump-sum-payments made previously during the

year) by the average profits from employment to ascertain to the nearest half, what multiple of the average, the

amount of lump-sum-payments is. Then select the relevant part of Tax Table. Eg: If the multiple is 1.5 (or 1.3

etc.) then the relevant part is Part “M 1½”.

(ii) Find from that part of the Table, the rate per centum corresponding to average profits from employment

(excluding lump-sum-payments).

(iii) Ascertain the tax by application of this rate per centum on the total lump-sum-payments (including any lump-

sum-payment made previously during the year of assessment).

(iv) Deduct from the tax so ascertained, the tax paid, if any, on any lump-sum-payment made previously during the

year of assessment and ascertain the net tax payable on lump-sum-payments being made now.

Example: Mr. Silva receives a bonus of Rs. 38,000 in April 2009. His regular profits from employment for that month

is Rs. 34,000. His basic monthly salary is Rs. 32,000 and the monthly average of allowances and the other benefits

(liable to tax) is Rs. 3000 (approximately).

Rs. The deduction in April in respect of Rs. 34,000 (according to Table No. 1) 314

Average regular profits from employment 35,000 (32,000 + 3,000)

The amount of Bonus is 1.08 times of average regular profits

(i.e. approximately 1 times the average monthly profits from employment)

38,000 = 1.08 35,000 Under M 1 part of the Table, the rate applicable to bonus is 5%

Tax on Bonus = 38,000 x 5%

Total tax deductible in April 2009 1,900 2,214

TAX TABLE NO. 3 Rates for the Deduction of Tax from Once-and-for-All Payments (Terminal Benefits)

(All Employees)

01. The amounts of the One-and-for-All Payments to which this table applies are:

(a) Retiring gratuity up to a ceiling of:

(i) Rs. 1,800,000; or

(ii) The product of average monthly salary for the last three years and the

number of completed years of service; which ever is higher;

Please apply Tax Table No. 2 on the excess, if any, over this ceiling.

(b) Any sum paid in commutation of pension;

(c) The balance (computed as given below) paid from a Provident Fund approved by the

Commissioner-General

Gross sum payable ……………

Less:- Employee’s Contribution ………….

+

Share of investment income after 31.03.1987 ………….. ………….

Balance ========

(d) The balance (computed as given below) paid from a regulated Provident Fund:

Gross sum payable …………

Less:- Employee’s Contribution ………….

+

Employer’s Contribution up to 31.03.1968 and

the interest thereon, if the employer had paid

tax at 15% on such contributions and interest ………….

+

Share of investment income after 31.03.1987 …………. …………..

Balance ========

(e) Any sum payable from the Employees Trust Fund (ETF) (excluding the share of Investment

income of the fund, after 31.03.1987);

(f) Any sum payable as compensation for loss of office or employment (excluding any such sum

referred to in Note (i))

Note: (i) Compensation for loss of office or employment not exceeding Rs. 2,000,000 consequent to:

(a) the voluntary retirement under a scheme which is uniformly applicable to all the employees: or

(b) the retrenchment by the employer, in accordance with a scheme approved by the Commissioner of

labour ;is exempt from income tax.

Employees are requested to obtain the concurrence of the Commissioner – General before conceding this

exemption.

(ii) Where the employer is a public corporation which pays the emoluments of its employees wholly or partly out

of the sums voted annually by the Parliament from the Consolidated Fund, the profits from employment

including any once – and – for – all payments of its employees are exempt from income tax. No deduction of

tax should therefore be made from such employees:

(iii) Where the employer is any other public corporation, each of the amounts referred to in (a) to (f) in Paragraph

01 above, made to any retiring employee, should be reduced in the ratio of the period of service of such

employee (with such employer) up to 31.03.1997 to the total period of service of such employee with such

employer. The Tax Table (i.e. Table No. 3) is applied to the payment so reduced.

02. (a) The rate of the deduction depends on :

(i) Where the employer makes the payment whether the scheme in accordance with which the

payment is made, is uniformly applicable to all the employees; or

(ii) Where the payment is made out of a fund, whether the employer has contributed to the fund in

accordance with a scheme which is uniformly applicable to all the employees.

A Scheme is uniformly applicable where the Commissioner – General of the opinion that it is uniformly

applicable.

(b) (i) Where the scheme (of payment or contribution) is uniformly applicable, deduct 10% of the amount

computed in accordance with par 01;

(ii) Where the scheme is not uniformly applicable and if ;

a) The payment is compensation for loss of office or employment, deduct 20% of the amount computed in

accordance with para 01.

b) The payment is other than compensation for loss of office or employment, deduct 35% of the amount

computed in accordance with para 01.

03. In the case of uniform scheme once – and- for – all payments, deduction should not be made in the following

situations:

(i) As regards Provident Funds, if the amount of any such “balance” (as computed in accordance with sub-

paragraph (c) or (d) of paragraph 01) does not exceed -

(a). Rs. 1,500,000 where the period of service or contribution is less than 20 years.

(b). Rs. 3,000,000 where the period of service or contribution is equal to or more than 20 years.

(ii) As regards any other amount (i.e. any amount referred to in (a), (b), (e) or (f) of paragraph 01), if such

amount does not exceed.

(a) Rs. 750,000 where the period of service or contribution is less than 20 years.

(b) Rs. 1,500,000 where the period of service (or contribution) is equal to or more than 20 years.

Note: In the circumstances referred to in para 02(b) (ii)(ie non uniform scheme payment), the full amount whether or not it

exceeds above limits, as the case may be, is subject to tax deduction at the respective rates of 20% or 35%.

4. Please retain with you the deductions made and advise your retiring employee to obtain a Direction from the PAYE branch.

On receipt of the Direction, please comply with it. If you do not receive a Direction before the expiry of 90 days from the

date of deduction and if you are not advised otherwise please remit the deductions to the Commissioner – General to the

credit of Account No. 2, Peoples Bank, Union Place branch. Please do not write your Taxpayer Identification Number

(TIN) in the space provided for it on the paying – in slip, please leave the space blank. Instead, please write “Tax on

Once - and – for – All Payment” in the space provided for “Type of Tax”.

TAX TABLE NO. 4 Deduction of tax from remuneration made to non-citizen employees

1. The normal tax tables (Tax table 1, 2, 3, 5, and 6) or applicable for deduction of tax under PAYE from non-citizen

employees as well if they are resident of Sri Lanka under the provision of Inland Revenue Act general provisions of

the Act except under special circumstances. (On or after 01.04.2008, any non-citizen employee will not be non-

resident under section 79(7).

2. Tax Tables applicable to deduct tax from monthly remuneration of non-citizen employees in special circumstances:

i. Tax table applicable for tax deduction from any non-citizen employee to be in Sri Lanka for less than 2 consecutive

years and who is present in Sri Lanka during the year of assessment for less than 183 days and from whose

remuneration, a deduction for provident fund is made.

Monthly Remuneration Tax

1. up to Rs.36232 - 4.6 of monthly remuneration

2. exceeding Rs.36232 but not exceeding Rs.72464 - 9.2% of monthly remuneration less Rs.1667

3. exceeding Rs.72464 but not exceeding Rs.78125 - 13.8% of monthly remuneration less Rs.5000

4. exceeding Rs.78125 but not exceeding Rs.106250 - 15% of monthly remuneration less Rs.5938




8. above Rs.231250 - 35% of monthly remuneration less Rs.39688

ii. Tax Tables applicable for tax deduction from any non-citizen employee to be in Sri Lanka for less than 2 consecutive

years and who is present in Sri Lanka during the year of assessment for less than 183 days and from whose

remuneration a deduction for provident fund is made.


1. up to Rs.33333 - 5% of monthly remuneration







iii. Tax table applicable for tax deduction from any non-citizen employee, resident in Sri Lanka [ie. physically present in

Sri Lanka for 183 days or more during the year of assessment; OR

treated as resident in Sri Lanka for not less than two consecutive years of assessment, and not subsequently absent from

Sri Lanka for an unbroken period of one year (subject to 30 days concession)],

and from whose remuneration, deduction for any provident fund is not made.


1. up to Rs.25000 - Nil

2. exceeding Rs.25000but not exceeding Rs.58333 - 5% of monthly remuneration less Rs.1250







TAX TABLE NO. 5 Annual Tax Table

How to use this table: 01. Please apply this table in respect of employees whose monthly regular profits from employment is generally below Rs.

25,000 but cumulative profits from employment up to any month in the year of assessment exceed Rs. 300,000 due to

payment of higher remuneration in certain months (instance where the monthly Tax Table should not be applied)

02. In respect of all lump-sum payments or once-and-for-all payments, deductions should be made in accordance with the

Table No. 2 or Table No. 3 where relevant.

03. Tax deduction should start from the month in which the cumulative profits up to that month exceed Rs. 300,000.

04. Thereafter tax deduction should be made monthly till the end of the year of assessment, using this table.

Example: Mr. Silva is an employee of a private institution and his monthly regular profits from employment is generally less than

Rs. 25,000. His Gross regular profits from employment for the period from April 2009 to January 2010 Rs. 332,650.

His remuneration is Rs. 33,690 since February 2010.

Tax deductions should be made as follows:

2010 January

Gross Employment income from April 2009 to January 2010 332,650

Tax chargable in January 312

2010 February

Gross Employment income from April 2009 to February 2010 366,340

Tax on Rs. 366,340 1,872

Tax Charged in January (Deducted) 312

Tax chargeble in February 1,560

2010 March

Gross Employment income from April 2009 to March 2010 400,030

Tax on Rs. 400,030 3,408

Tax Charged in January & February (Deducted) 1,872

Tax chargeable in March 1,536

Tax Table No. 6 Tax on Tax Rates

(1) Instances where tax on tax arise.

(i) When an employer or any other person settles income tax of an employee, without it being deducted

from his salary.

(ii) Reimbursement by the employer of Income Tax already deducted and paid from employee's salary.

(2) Use the part I, to compute the tax on tax in respect of monthly remuneration.

Determine the tax on tax by the application of the relevant rate percentage on the monthly tax under tax table 01.

Example 1: Expatriate Mr. X was employed in Sri Lanka on 01.04.2003. His gross salary for April 2009 is 100,000/-.

Employer has undertaken to pay his tax without deducting it from his salary. Computation of tax is as

follows:-

Rs.

Tax payable on Rs. 100,000 for April 2009 5313

Add. Tax on Tax at 17.65% of Rs. 100,000 928

Total income tax payable for April 2009 6251

(3) Use part II, to compute the tax on tax in relation to lump-sum payments.

Compute the tax on tax using the rate per centum applicable on the basis of tax computed under tax table 2.

Example (2) Expatriate Mr. Y was employed in Sri Lanka on 01.04.2003. His gross salary for April 2009 is Rs.

100,000. He was paid with bonus of Rs. 200,000 in April, which is 2 months salary.

Employer has undertaken to pay his tax without deducting it from his salary.

Computation of tax is as follows:

Tax on monthly gross salary of Rs. 100,000

according to tax table 01 5313

tax on bonus of Rs. 200,000

under tax table M2

(2000000 x 27.3) = 55000

100

Add. Tax on tax at 17.65% of Rs. 5313 tax = 938

Tax on tax at 4285% of Rs. 55000 tax = 23567 = 24505

Total income tax payable for April 2009 84818

(tax on tax rate applicable to Lump-sum payments which includes the rate per centum of 27.5 computed on 55000 tax = 42.85% )

Part I Rate of tax on tax in respect of Sri Lankan employees and non-citizen employees who have exceeded the five year period.

Monthly Tax Rs.

Tax on Tax Rate

01 - 1,667

1,668 - 5,000

5,001 - 10,000

10,001 - 18,333

18,334 - 28,750

28,751 - 41,250

41,251 and above

5.26%

11%

17.65%

25%

33.33%

42.85%

53.85%

Part II

Tax on Tax on Lump-sum-payments (e.g. Bonus etc.)

Rate per centum applicable to lump-sum-payment From To

Tax on Tax Rate

0.0% - 5% 5.26%

5.5% - 10% 11%

10.5% - 15% 17.65%

15.5% - 20% 25%

20.5% - 25% 33.33%

25.5% - 30% 42.85%

30.5% and above 53.85%

Tax Table No. 7

Rate for the deduction of tax from the remuneration of a Chairman or a Director or a non-executive Director of a Company, not included in the P.A.Y.E payroll 10%

47287914-Sri-Lanka-PAYE-Income-Tax-Tables.pdf

Documents

Transcript of 47287914-Sri-Lanka-PAYE-Income-Tax-Tables.pdf