IRD introduces online payment and advanced personal income tax systems | Daily News


 

IRD introduces online payment and advanced personal income tax systems

Sarah Afker
Sarah Afker

Partner – Tax Services BDO Sarah Afker said that the Inland Revenue Department had opened the Alternative Tax Payment System for the collection of taxes.

Afker was speaking to the Chartered Accountants of Sri Lanka. Afker also outlined the framework for the Advanced Personal Income Tax which will be applicable for 2020/21.

Afker said that the alternative tax payment system was now operational with the participation of major banks. Taxpayers are now able to remit taxes owed to the Inland Revenue through the system. The Inland Revenue Department has also created E-Services for the obtaining of a Tax Identification Number. The Advanced Personal Income Tax system was also outlined which allows employees to give or withdraw consent for the payment of their income taxes through their employer.

The new system will view this as the employer facilitating the employee paying income tax. The new government has increased the threshold for taxation to Rs 750,000 per quarter or Rs 3 million per year. Relief has also been given for payments up to Rs 1.2 million for health, local education, housing loan interest, pension, and share market expenditures.

Employers choosing to opt-out will have to submit a Statement of Estimated Tax (SET) and make payments quarterly.

Incomes from other regular sources like interest and dividends are no longer subject to withholding tax. Withholding Tax was considered a final tax. Recipients will now have to pay advanced income tax under the tax slabs applicable and file a return.

Taxpayers will have to obtain a Tax Identification Number (TIN), submit SET on August 15, make quarterly payments, make final payment on September and file an Income Tax Return by November 30. Under Advanced Personal Income Tax, the first Rs 3 million of income will be taxed at 6 percent, the next Rs 3 million at 12 percent, and the balance at 18 percent.

The wording of the legislation is yet to be finalized and passed in parliament. Representatives from the IRD foresaw issues on dividend income of certain high net worth individuals being subject to income tax on dividend receipts. IRD representatives felt that it was easier to implement retrospective legislation when it is for the benefit of the taxpayer.


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