Advance personal income TAX (APIT)- Sri Lanka

Advance personal income TAX (APIT)- Sri Lanka

• 1.
  Income Tax onIndividuals – Advance Personal Income Tax- APIT Sri Lanka PRASANNA WALISUNDARA- FCA, MBA,ACMA,BSC,ATII 1
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  Key Areas ofDiscussion ➢Introduction ➢Statutory Obligations - Employee ➢Statutory Obligations - Employer ➢Calculation of APIT ➢Where We are? ➢Questions? 2
• 3.
  Introduction New PAYE TaxTables issued for the period January 1, 2020 to March 31, 2020 3 April 15th 2020 December 31 2019 Press notice (No. PN/PAYE/2020-01) gives an option to withhold tax on employment income, subject to the consent of the respective employee February 5, 2020 Press notice (No. PN/IT/2020-02) issued ► Removing WHT on employment income under PAYE scheme ► Removing WHT on interest and dividend income ► Requesting refund of any WHT deducted Also the latest amendments have been passed in the parliament & law is enacted from 13th May 2021 with retrospective effect for APIT
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  Statutory Obligations -Employee ➢Employee should furnish Primary Employment Declaration to his Primary Employer. ➢Where the Employer could not deduct the tax due to absence of the consent of the employee, the Employee himself responsible. ➢Every employee whose Employment income exceeded Rs.250K on monthly or annual income exceeds Rs.3Mn he must submit the SET (Statement of Estimated Tax). ➢Submit the APIT Certificate (T 10) with the annual return of income. 4
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  Statutory Obligations -Employer ➢Employer should deduct APIT with the consent of his employee. ➢Remit to the Commissioner General every tax deduction made under APIT Scheme. ➢Issue a APIT Certificate to all employees including zero (0) tax deducted employees who have not given the consent. (T 10). ➢Employer shall furnish Annual Statement, with Schedules to the Commissioner General not later than 30th April every year. 5
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  APIT Calculation ➢Monthly TaxDeductions from Regular profits 6 Taxable income Tax rate Tax-free allowance up to LKR 3,000,000 Nil Next LKR 3,000,000 6% Next LKR 3,000,000 12% Balance 18%
• 7.
  Liable Income forAPIT ➢ Salary, wages, leave pay, overtime pay, fees, pensions, commissions, gratuities, bonuses, and other similar payments. ➢ Personal allowance, including any cost of living, subsistence, rent, entertainment or travel allowance ➢ Other payments, including gifts, received in respect of the employment. ➢ The market value of shares, at the time allotted, under an employee share scheme, including shares allotted as a result of the exercise of an option or right to acquire the shares 7
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  Liable Income forAPIT-Non cash benefits ➢ “Value” of any benefit of any place of residence provided by the employer. ➢ The value of benefit to an employee from the (fully or partly) private use of any motor vehicle. ➢ Other Benefits provided by the Employer. (Hotel accommodation, Telephone, Medical Bills…) 8
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  Excluded Gains andprofits from employment ➢ A discharge or reimbursement of expenses incurred by the individual on behalf of the employer. ➢ A discharge or reimbursement of an individual's dental, medical or health insurance expenses where the benefit is available to all full-time employees on equal terms. 9
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  Reliefs for EmploymentIncome ➢ Tax Free Allowance /Personal Relief Rs.3,000,000/= -Accordingly, any resident individual who receives remuneration in excess of Rs. 3,000,000 per annum or Rs. 250,000 per month is liable to income tax from employment income. ➢ Qualifying payments amounting to LKR 1,200,000 per annum will be permitted on following: -Health expenses including contributions to medical insurance -Education expenses incurred locally, for such individual or on behalf of his children -Interest paid on housing loans -Contributions made to an approved pension scheme - Expenditure incurred for the purchase of equity or security 10
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  Registration (Obtaining aTIN) 11 ► Following documents may be required for registration ▪ Duly filled application form ▪ Letter of Authorization ▪ Sources of Income (Business, Investment etc.) ▪ Proof of Local Address (Rent agreement/letter from company) Also you may get the registration through e-services of the IRD portal. Please login to Registration eService - RAMIS (ird.gov.lk)
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  Statutory Due Dates(2021/2022) ► Statutory Due Dates 1st Installment Payment - August 15 Furnishing of SEIT - August 15 2nd Installment Payment (and SET if applicable) - November 15 3rd Installment Payment (and SEIT if applicable) - February 15 4th Installment Payment (and SEIT if applicable) - May 15 Final Payment (if any) - September 30 Furnishing of Return of Income - November 30 ► All Returns can be filed manually or electronically and a acknowledgement of the receipt will be issued by the tax authorities 12
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  Where We arenow? ➢ Not received the Primary/ Secondary Consent Document ➢Not deducted APIT so far ➢Not registered for IT (When the monthly income is exceeded Rs.250k or annual income exceed Rs.3Mn) 13
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  Penalties, Interest andCriminal Proceedings for non compliance 14
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  Q & A 15