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 Employment | Tax |
| Up to Rs. 100,000 | Exempted |
| Rs. 100,001 to Rs. 150,000 | 4% – Rs. 4000 |
| Rs. 150,001 to Rs. 200,000 | 8% – Rs. 10,000 |
| Rs. 200,001 to Rs. 250,000 | 12% – Rs. 18,000 |
| Rs. 250,001 to Rs. 300,000 | 16% – Rs. 28,000 |
| Rs. 300,001 to Rs. 350,000 | 20% – Rs. 40,000 |
| Exceeding Rs. 350,001 | 24% – 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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