+ What do I need to do?
If you belong to one of these categories:
- Open a Tax file.
- Do your SET computation for the relevant Tax years and file the SET by 15th August.
- Do your final Tax computation, making sure you capture all the savings possible, then make your final payment by 30th September and Tax return by 30th November.
+ I don't know whether I have a tax file or not. How can I check?
We can check that for you with the Inland Revenue Department. Please contact us for assistance.
+ Can I open a tax file by myself?
Yes, you can. Instructions for opening a tax file can be found on the Inland Revenue Department website:
http://www.ird.gov.lk
+ What details do you need to open a tax file?
Please download the IRD instructions on how to open a tax file for detailed information on the required details and documentation.
+ How can I pay my taxes?
+ What is a SET?
SET is an acronym for Statement of Estimated Tax Payable, which is a form used to calculate the estimated income and expenses for the financial year. You are required to submit a SET by the 15th of August for the year of assessment, along with the 1st Quarter tax payment if you need to make a payment.
+ What is a Return?
An individual is required to file a Return of Income in a prescribed format (with financial statements and supporting schedules, if applicable) not later than eight months after the end of each year of assessment (on or before 30th November immediately following the end of the tax year).
+ What are the tax payment deadlines?
The tax payment deadlines are as follows:
- a. 1st Quarterly installments - 15th of August
- b. 2nd Quarterly installments - 15th of November
- c. 3rd Quarterly installments - 15th of February in that year of assessment
- d. 4th Quarterly installments - 15th of May of the next succeeding year of assessment
- e. Final Payment - 30th of September of the next succeeding year of assessment
+ What details do I need to calculate/file my return?
To calculate and file your return, you need the following details:
- Supporting documents to show all your income
- Supporting documents to show any allowable deductions
- A filled Statement of Assets and Liabilities
+ What happens if I don't file the Tax Return?
If you fail to file the Tax Return, you may face tax penalties as per the provisions of the Inland Revenue Department Act. The penalties can start at Rs. 50,000 for each compliance violation, and you can be fined up to Rs. 1 Million for not filing a Tax Return. In some cases, there may even be the possibility of jail time.
+ What sort of Penalty can be charged from me?
The penalties that can be charged are as follows:
- Non-submission/submitting false or misleading information (Under Section 178 (1) of the Inland Revenue Act):
- A person who fails to file a tax return on or before the due date shall be liable to pay a penalty equal to the greater of 5% of the amount of tax owing, plus a further 1% of the amount of tax owing for each month or part of a month during which the failure to file continues, or Rs. 50,000 plus a further Rs. 10,000 for each month or part of a month during which the failure to file continues.
- Penalty for non-payment/late payment (Under Section 179 (2) of the Inland Revenue Act):
- A person who fails to pay all or part of an installment required under this Act, within 14 days of the due date, shall be liable to a penalty equal to 20% of the amount of tax due but not paid.
- Interest on default (Under Section 159 (1) of the Inland Revenue Act):
- In the event of a default of an installment or part thereof, 1.5% interest per month or part of a month could be charged on such default installment or part of the installment.
+ I'm retired now. How can I close my tax file?
You can close your tax file by submitting a request to the IRD along with the required documents. Once your tax file is closed, you won't have to file tax returns, but if your income exceeds 1.2 Million per year, you won't be able to close your tax file.
