Up to 31.03.2018-In terms of Section 114 of the Inland Revenue Act, No. 10 of 2006, Employers are required to deduct Income Tax on Employment Income of employees at the time of payment of remuneration.
For this purpose, the Commissioner General of Inland Revenue specifies Tax Tables which are to be used in making such tax deductions. Since the Tax is paid at the time of earning the remuneration, This System is called Pay-As-You-Earn System (PAYE)
Applicability of provisions of Inland Ravenue Act,No.24 of 2017 w.e.f 01.04.2018
How to apply Tax Tables
An employer who makes a payment during a year of assessment to an employee, in respect of that employee’s employment, the employer must withhold an amount from such payment using the relevant PAYE table.
In the case of employee who has furnished a Primary Employment Declaration, the applicable PAYE tables are as follows.
|Profits from Employment||Relevent Table|
|Regular profits from the employment||Table 01 Summarised Tax Table 01|
|Lump-sum payment||Table 02 Summarised Tax Table 02|
|Once-and-for-all payment (Terminal Benefits)||Table 03|
Payment received by the non-citizens in Sri Lanka
|Where the monthly regular profits is less than LKR 100,000 but the cumulative profits from the employment up to any month in the year of assessment exceeds LKR 1,200,000.||Table 05|
|Tax on Tax Table||Table 06|
In case where the employee who has not furnished a Primary Employment Declaration, or who has more than one employment the applicable tax table
|Monthly payment||Tax Rate|
|Up to LKR 50,000||10%|
|More than LKR 50,000|
SPECIAL NOTE FOR EMPLOYERS AND EMPLOYEES
Note: - Please use the specified form of Primary Employment Declaration