Srilnakan Taxation system Part – II

Srilnakan Taxation system Part – II

Srilanka taxation system has significant background as varies kingdom formulated different tax systems. After formulated public government also has sound full taxation. This system mainly two parts such as

1.      Direct Tax

v  This is impressed directly his income and wealth

v  Only selected group paid 

v  Paid to increase level

o   Income / wealth increases tax level also increases

v  Payer get some additional advantages / Services

2.      Indirect Tax

v       Tax payer  don’t know paid tax

v       Poor peoples and rich peoples don’t know how much of paid in tax

v       This impress in goods and service.

                                                              i.      Example :- VAT, GST

Income Tax

Income tax is charged based on

Inland Revenue Act No. 10 of 2006 as amended by Inland Revenue Amendment Acts No. 10 of 2007, 9 of 2008 and 19 of 2009.

 The act provides the legal authority to charge, levy and collect income tax on the profits and income of every person.which arose or is arising to such person for every year of assessment commencing on or after 1st of April, 2006.

Income tax levy two major types of peoples

1.   Residential Peoples

 In respect of a person who is deemed to be resident in Sri Lanka is chargeable with income tax in respect of his income from Sri Lanka and income derived by him from outside Sri Lanka.

2.   Outside Peoples

The liability to income tax therefore extends to his global income. A person who is deemed to be non-resident in Sri Lanka is chargeable with income tax in respect of only the profits and income, arising or derived from Sri Lanka.

For example Mr John do the business in srilanka and also he has house in London so his income tax calculation based on only for John’s business.

 

Income / Return
Return of Income Tax (IT) should be furnished on or before 30th day of the month of November that end of relevant assessment year.

Payment of Tax
IT is payable on self assessment basis in five installments.

1st Installment - on or before the 15th day of the month of August that relevant year

2nd Installment - on or before the 15th day of the month of November that relevant year

3rd Installment - on or before the 15th day of the month of February that next year

4th Installment - on or before the 15th day of the month of May that next year

Final Payment - on or before the 30th day of the month of September that next year

Inland Revenue department introduce new way to promote tax collection - give tax discount

Discount on Income Tax payable by Individuals

Any individuals who makes any quarterly self-assessment income tax payment, one month before the due date, is entitled to a 10% discount thereon (not exceeding such percentage on the instalment based on the current year profits)