The aim of this article is to highlight the taxation process and types of tariffs in the named country. With a population of about 21,582,910, it has a total of about 283 companies at large. The taxes that the government imposes on its residents are similar to those used by many countries. The Inland Revenue Department is in charge of taxation activities in the country.
Individual Tax rates
Levies subject to residents of the country ranges differently depending on the employment salaries of individuals. In this case, those who earn large sums of money receive high taxes. Similarly, those who earn less do not suffer from high rates of payments. However, the levy rate ranges between 6% to 18%. Moreover, locals whose paycheck exceeds 25000 LKR are not exempted from paying the salary tax. If a person’s incomes originate from either employment, investing activities, or other forms of payments, then disbursement of income tax is mandatory.
Tax reliefs
Individual Relief
Mostly referred to as personal relief is computed to 3000000 yearly. This will be exempt to persons who exist as trustees or liquidators.
Tax Relief on Rent
A total deduction of about 25% is made on rental expenses for local residents.
Tax reprieve on Expenditures
During the financial year, local citizens are subjected to expenditures that accrue to 1200000 annually. Such include collections for medical securities. Other examples of expenditures include.
Educational Expenditures
An entity can be focused on expenditures on education. The imposition can either be helpful to the citizen or his/her offspring.
Loans on Houses
This will consist of all the interest that was made as a result of house loans.
Purchase of Equity
It refers to all collections that lead to the purchase of securities.
Pensions
Deductions are made to cater to payment purposes after retirement.
Tax rates on Companies
The toll rates on companies differ from that of individuals in Sri Lanka. Rating s on profitable organizations has a superior significant difference compared to person ratings. This also indicates that the larger the company the higher the ratings. The reverse statement of the statement is also true.
Exemptions
Corporation owners are provided with opportunities to make favorable decisions on deductions. For example, deciding on whether to shell out a 20% aggregate income or Rs500000. In such a case the company decides on which deductions are cheaper and affordable. Other exemptions include output as the result of the sale of products obtained from agricultural practices. Non-local outputs in foreign currency might also be exempted from such deductions. However, the condition is that the profits must be remitted to the confined banks.
Tax Payment Process
In Sri Lanka, most costs are divided into four sections that have stipulated dates and duration. The preliminary repayment takes nearly four months before the due date is over. Using the monetary year 2020, the second installment was between July and November while the third installment was involving October up to the first month of the next economic year (2021). The final installment was between January 2021 to May the same year.
On payment of income, the government of Siri Lanka offers two payment options. The first progression is to make a registration as a taxpayer. A return form is normally issued subsequent to appropriately filling the requirements. If an individual chooses to use manual methods to file his or her returns, he or she can proceed to fill the type manually and submit it after making payments at the bank. The depository receipt is used as evidence that payments were made.
On the other hand, when one chooses to use the online method, after login into the eservices, the next procedure is providing payment information. After this, a voucher number is provided to the taxpayer and what follows are online costs. The taxpayer is guided on how to make online payments in order to avoid wrong procedures.
