The New Inland Revenue that effective from 1st April 2018 has changed the formulae of Pay As You Earn (PAYE) Tax Calculation on your employment profits.

See below table for tax calculations

Monthly Regular Profit from EmploymentTax
Up to Rs. 100,000Exempted
Rs. 100,001 to Rs. 150,0004% – Rs. 4000
Rs. 150,001 to Rs. 200,0008% – Rs. 10,000
Rs. 200,001 to Rs. 250,00012% – Rs. 18,000
Rs. 250,001 to Rs. 300,00016% – Rs. 28,000
Rs. 300,001 to Rs. 350,00020% – Rs. 40,000
Exceeding Rs. 350,00124% – Rs. 54,000

 

As above detail is bit confusing to understand, let see below examples and calculate how much would be reduce from salary as PAYE Tax.

Example 1

If your Monthly Salary is Rs.80,000/-

You will be exempted from PAYE for monthly income. Let assume if you get Rs. 350,000 as Bonus than you will be taxable as below

Taxable Calculation

Annual Salary     Rs.80,000 x12     Rs. 960,000/-

Bonus                   Rs. 350,000/-

Total Taxable Profit         Rs. 1,310,000/-

Tax Exempted                   Rs. 1,200,000/-

Tax Calculation will be 1,310,000 x 4% = 52,400 – (4,000 Per Month x 12 Months)

So Final Tax Payment would be Rs. 4,400/-

 

Example 2

If your Monthly Salary is Rs.150,000/-

You will be liable for 8% Tax and reduction of Rs.10,000 per month of PAYE for monthly income. Let assume if you get Rs. 350,000 as Bonus than you will be taxable as below

Taxable Calculation

Monthly Salary  Rs.150,000/-

New Income Tax for Pay As You Earn (PAYE) in Sri Lanka for Year 2018

PAYE from Monthly Income        150,000×8% – Rs.10,000 = Rs. 12,000-Rs.10,000 = Rs. 2,000/- Per Month

Bonus                   Rs. 350,000/-

PAYE for Bonus will be 350,000 x 20% = 70,000

Hope above Calculations are clear, please do write us a comment if you need any further clarifications




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