Steps in calculating income tax withholding
There is no official online calculator provided by the tax authorities for calculating withholding. The steps in the process are outlined as follows:
Step 1: determine gross income in the pay period.
An individual's income from an employment for a year of assessment shall be the individual's gains and profits from the employment for that year of assessment. The gains and profits include all cash and non-cash benefits from employment (2.1.1).
Step 2: make allowable deductions.
Residents and non-resident citizens , are entitled for deduction of relief of Rs 1,200,000 for each year of assessment. This relief cannot be deducted by any individual who is a non-resident and non-citizen for a year of assessment.
(Inland Revenue Act No 10 of 2021, accessed at Gov.lk)
Example of steps 1 and 2
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Web page updated on 28 Aug 2024 12:04