Revised personnel income tax with effect from 01st Jan 2020 in Sri Lanka

1. Revised PAYE tax => APIT (Advance Personal Income Tax)
Ruwantha Jayasekara – FCA, MBA (PIM-USJP), Bsc (B.admin) Sp.

2. KEY CHANGES
• Employment Income
• Pay-As-You-Earn (PAYE) Scheme removed with effect from 01/Jan/2020
• Advance Personal Income Tax (APIT) Scheme started w.e.f 01/Jan/2020
• Removal of Final withholding (WHT) payments
• Eg; WHT on Interest / Dividend
• Removal of Non Final withholding (WHT) payments
• Eg ; WHT on Rent / Services
Ruwantha Jayasekara – FCA, MBA (PIM-USJP), Bsc (B.admin) Sp.

3. ADVANCE PERSONAL INCOME
TAX (APIT)
Salary from Jan 2020 to March 2020 :-
At the request of Employee (You), The Employer
(Company) can deduct Advance Personal Income
Tax (APIT) for last 3 month from April salary and
must be remitted to IRD or before 15th May 2020
Salary from April 2020 onwards :-
At the request of Employee (You), The Employer
(Company) can start deduction of Advance
Personal Income Tax (APIT) through payroll from
April onwards and must be remitted to IRD on
monthly basis (as did in the past
OPTION ONE
Salary from Jan 2020 to March 2020 :-
The Employee (You) can assess your Advance
Personal Income Tax (APIT) for last 3 month
and must be remitted to IRD or before 15th
May 2020
Salary from April 2020 onwards :-
The Employee (You) can assess the Advance
Personal Income Tax (APIT) from April onwards
and must be remitted to IRD on quarterly
basis
OPTION TWO
Ruwantha Jayasekara – FCA, MBA (PIM-USJP), Bsc (B.admin) Sp.

4. ADVANCE PERSONAL INCOME TAX
(APIT)
NEW RELIEFS
• Personal Income Tax relief – LKR3,000,000/- per annum (LKR250,000/- per month)
• Relief on expenditure (for resident individual) – up to LKR1,200,000/- per annum
(LKR100,000/- per month)
1. Health expenditure (Including contribution to medical insurance)
2. Educational expenditure (Incurred locally. Could be claim for individual or on
behalf of the children)
3. Interest paid on housing loans
4. Contributions made to an approved pension scheme
5. Expenditure incurred for purchase of equity or security
Ruwantha Jayasekara – FCA, MBA (PIM-USJP), Bsc (B.admin) Sp.

5. ADVANCE PERSONAL INCOME TAX
(APIT)
Computation- Tax on cumulative income from employment (Quarterly basis)
• Quarterly employment benefit (Cash and Non cash benefits) xxxx
• Lump sum payments xxxx
Cumulative gains and profits from employment for the period xxxx
Less : Personal income tax relief 750,000 per quarter
Other relief on expenditure (Up to 300,000 per quarter)
(xxx)
Taxable Income xxxx
Tax Liability xxx
(Apply the relevant tax rate (Refer the tax table below)
Taxable Income Tax Rate
1st 750,000 6%
2nd 750,000 12%
On the Balance 18%
Ruwantha Jayasekara – FCA, MBA (PIM-USJP), Bsc (B.admin) Sp.

6. ADVANCE PERSONAL INCOME TAX (APIT)
Example 01
960,000
640,000
1,600,000
Less:Personal income taxrelief750,000 perquarter (750,000)
Otherreliefon expenditure (Up to 300,000 perquarter) -
(750,000)
Taxable Income 850,000
TaxLiability 57,000
Quarterly employment benefit (Cash and Non cash benefits)
Lump sum payments
Cumulative gainsand profitsfrom employment forthe period
payment ofRs. 640,000 in February 2020.
Mr. Silva isa resident employee ofa private institution and total ofhislast 3 monthsregular
profitsfrom employment (includingnon-Cash Benefits)wasRs960,000. He received a bonus
Ruwantha Jayasekara – FCA, MBA (PIM-USJP), Bsc (B.admin) Sp.

7. ADVANCE PERSONAL INCOME TAX (APIT)
Example 02
medical insurance/expenses and for his higher education
960,000
640,000
1,600,000
Less : Personal income tax relief 750,000 per quarter (750,000)
Other relief on expenditure (Up to 300,000 per quarter) (230,000)
(980,000)
Taxable Income 620,000
Tax Liability 37,200
Quarterly employment benefit (Cash and Non cash benefits)
Lump sum payments
Cumulative gains and profits from employment for the period
Mr. Silva is a resident employee of a private institution and total of his last 3 months regular
profits from employment (including non-Cash Benefits) was Rs 960,000. He received a bonus
payment of Rs. 640,000 in February 2020. Also he spent Rs. 230,000 for housing loan interest,
Ruwantha Jayasekara – FCA, MBA (PIM-USJP), Bsc (B.admin) Sp.

8. WHICH OPTION IS THE BEST ?

9. DO WE NEED TO REGISTER WITH DIR
• Every person liable to furnish a ROI for a Y/A (Sec 102(1) IRA No 24 of 2017)
Registration to be done within 30days from the end of basis period
• Penalties
• Failure to register – LKR 50,000 (Sec 177 IRA No 24 of 2017)
• Failure to file return – Maximum LKR 400,000 (Sec 178(2) IRA No 24 of 2017)
• Interest levied @ 1.5% - compound monthly
Ruwantha Jayasekara – FCA, MBA (PIM-USJP), Bsc (B.admin) Sp.

10. Ruwantha Jayasekara – FCA, MBA (PIM-USJP), Bsc (B.admin) Sp.