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2.1 Withholding of income tax

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2.1.2 Calculating income tax withholding | Sri Lanka

Sri Lanka

Steps in calculating income tax withholding

There is no official online calculator provided by the tax authorities for calculating withholding. The steps in the process are outlined as follows:

Step 1: determine gross income in the pay period.

An individual's income from an employment for a year of assessment shall be the individual's gains and profits from the employment for that year of assessment. The gains and profits include all cash and non-cash benefits from employment (2.1.1).

Step 2: make allowable deductions.

Residents and non-resident citizens , are entitled for deduction of relief of Rs 1,200,000 for each year of assessment. This relief cannot be deducted by any individual who is a non-resident and non-citizen for a year of assessment.

(Inland Revenue Act No 10 of 2021, accessed at Gov.lk)

Example of steps 1 and 2

Employment income of Mr Johon for a month
Employment income
Cash benefits500,000.00
Non-cash benefits250,000.00
Remuneration subject to APIT at source750,000.00

Step 3: apply the correct tax table and the

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Web page updated on 28 Aug 2024 12:04