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

Tax Table No. Tax Table No.

.1 .2

Monthly Tax Deductions from Regular profits

Rates for deductions of tax from Lump-sum-payments

Tax Table No. Tax Table No.

.3 .4

Deduction of Tax from Once-and-for-all-payments Rates for the deduction of tax from payments made to Non-citizen Employees in Sri Lanka

< Tax Table No. Tax Table No.

.5 .6

Annual Tax Table Tax on Tax Rates

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.

1.
i.

The Employers are required to :

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 ii When an employer or any other person settles income tax of an employee, without it being deducted from his salary, or Reimbursement (by the employer) of income tax already deducted and paid from employees salary. 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.

3.

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

02.

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 Exempt 4.6% of monthly remuneration less Rs. 1,250 9.2% of monthly remuneration less Rs. 4,167 10% of monthly remuneration less Rs. 4,792 15% of monthly remuneration less Rs. 9,687 20% of monthly remuneration less Rs. 16,250 25% of monthly remuneration less Rs. 24,896 30% of monthly remuneration less Rs. 35,625 35% of monthly remuneration less Rs. 48,437

1.
2.

Monthly remuneration up to Rs. 27,184 Monthly remuneration exceeding Rs. 27,184 but not exceeding Rs. 63,406

3.

Monthly remuneration exceeding Rs. 63,406 but not exceeding Rs. 78,125

4.

Monthly remuneration exceeding Rs. 78,125 but not exceeding Rs. 97,917

5.

Monthly remuneration exceeding Rs. 97,917 but not exceeding Rs. 131,250

6.

Monthly remuneration exceeding Rs. 131,250 but not exceeding Rs. 172,917

7.

Monthly remuneration exceeding Rs. 172,917 but not exceeding Rs. 214,584

8.

Monthly remuneration exceeding Rs. 214,584 but not exceeding Rs. 256,250

9.

Monthly remuneration exceeding Rs. 256,250

TAX TABLE No. 2 Rates for the Deduction of Tax from Lump-sum Payments
How to use this table: 01. 02. Bonus, Leave encashment etc., generally paid annually are considered as Lump-sum-payments. This Table No. 2 comprises 24 parts, numbered from M to M 12. M is the part that applies if the amount of lump sum payments is times the average monthly profits from employment. Similarly, M 3 is the part that applies if the amount of lump sum payments is 3 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 1. (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 lumpsum-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. 314

The deduction in April in respect of Rs. 34,000 (according to Table No. 1) 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) (ii) Rs. 1,800,000; or 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) (c) Any sum paid in commutation of pension; The balance (computed as given below) paid from a Provident Fund approved by the Commissioner-General Gross sum payable Less:- Employees 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:- Employees Contribution + Employers 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) (b) the voluntary retirement under a scheme which is uniformly applicable to all the employees: or 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 subparagraph (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 nonresident 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 1. 2. 3. 4. 5. 6. 7. 8. up to Rs.36232 exceeding Rs.36232 but not exceeding Rs.72464 exceeding Rs.72464 but not exceeding Rs.78125 exceeding Rs.78125 but not exceeding Rs.106250 exceeding Rs.106250 but not exceeding Rs.147917 exceeding Rs.147917 but not exceeding Rs.189583 exceeding Rs.189583 but not exceeding Rs.231250 above Rs.231250 Tax - 4.6 of monthly remuneration - 9.2% of monthly remuneration less Rs.1667 - 13.8% of monthly remuneration less Rs.5000 - 15% of monthly remuneration less Rs.5938 - 20% of monthly remuneration less Rs.11250 - 25% of monthly remuneration less Rs.18646 - 30% of monthly remuneration less Rs.28125 - 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. Monthly Remuneration 1. 2. 3. 4. 5. 6. 7. up to Rs.33333 exceeding Rs.33333 but not exceeding Rs.66667 exceeding Rs.66667 but not exceeding Rs.100000 exceeding Rs.100000 but not exceeding Rs.141667 exceeding Rs.141667 but not exceeding Rs.183333 exceeding Rs.183333 but not exceeding Rs.225000 above Rs.225000 Tax - 5% of monthly remuneration - 10% of monthly remuneration less Rs.1667 - 15% of monthly remuneration less Rs.5000 - 20% of monthly remuneration less Rs.10000 - 25% of monthly remuneration less Rs.17083 - 30% of monthly remuneration less Rs.26250 - 35% of monthly remuneration less Rs.37500

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. Monthly Remuneration 1. 2. 3. 4. 5. 6. 7. 8. up to Rs.25000 exceeding Rs.25000but not exceeding Rs.58333 exceeding Rs.58333 but not exceeding Rs.91667 exceeding Rs.91667 but not exceeding Rs.125000 exceeding Rs.125000 but not exceeding Rs.166667 exceeding Rs.166667 but not exceeding Rs.208333 exceeding Rs.208333 but not exceeding Rs.250000 above Rs.250000 - Nil - 5% of monthly remuneration less Rs.1250 - 10% of monthly remuneration less Rs.4167 - 15% of monthly remuneration less Rs.8750 - 20% of monthly remuneration less Rs.15000 - 25% of monthly remuneration less Rs.23333 - 30% of monthly remuneration less Rs.33750 - 35% of monthly remuneration less Rs.46250 Tax

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

332,650 312

2010 February

Gross Employment income from April 2009 to February 2010 Tax on Rs. 366,340 Tax Charged in January (Deducted) Tax chargeble in February

366,340 1,872 312 1,560

2010 March

Gross Employment income from April 2009 to March 2010 Tax on Rs. 400,030 Tax Charged in January & February (Deducted) Tax chargeable in March

400,030 3,408 1,872 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) (2) Reimbursement by the employer of Income Tax already deducted and paid from employee's salary.

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 Add. Tax on Tax at 17.65% of Rs. 100,000 5313 928 6251

Total income tax payable for April 2009

(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 tax on bonus of Rs. 200,000 under tax table M2 (2000000 x 27.3) 100 Add. Tax on tax at 17.65% of Rs. 5313 tax = Tax on tax at 4285% of Rs. 55000 tax Total income tax payable for April 2009 = 938 23567 = 24505 84818 = 55000 5313

(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. 01 1,668 5,001 10,001 18,334 28,751 1,667 5,000 10,000 18,333 28,750 41,250 Tax on Tax Rate

5.26% 11% 17.65% 25% 33.33% 42.85% 53.85%

41,251 and above

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% 10.5% 15.5% 20.5% 25.5% 30.5%

and above

5% 10% 15% 20% 25% 30%

5.26% 11% 17.65% 25% 33.33% 42.85% 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%