Calculating the Tax Liability for the Year of Assessment 2023/2024

On 24th September 2024, the Department of Inland Revenue of Sri Lanka issued a crucial notice to all taxpayers, reminding them of the impending deadline for tax payments for the Year of Assessment 2023/2024. This blog post will guide you through understanding this notice and calculating your tax liability.

Who is the Notice Applicable to?

The notice is applicable to:

• Individuals
• Companies
• Corporations
• All other persons

Essentially, it covers all entities and individuals who are required to pay taxes in Sri Lanka.

Important Codes to Note

• Code for the Period: 23240
• Tax Type Codes:
  • Corporate Income Tax (CIT): 02
  • Partnership Income Tax (PIT): 09
  • Individual Income Tax (IIT): 05

Key Deadline

If your tax liability (total taxable income) exceeds your tax credits, the final payment for the tax is due by 30th September 2024. Missing this deadline could result in penalties, so it’s crucial to ensure your payments are made on time.

Steps to Calculate Your Tax Liability

1. Determine Your Total Taxable Income:
   • For individuals, this includes all sources of income such as salaries, business income, and any other taxable earnings.
   • For companies and corporations, this includes gross income minus allowable deductions.
2. Apply the Relevant Tax Rate:
   • Use the tax rate applicable to your category (individual, company, corporation, etc.) to calculate the initial tax amount.
3. Subtract Tax Credits:
   • Deduct any tax credits you are eligible for from the initial tax amount. Tax credits can include payments already made, withholding taxes, and other allowable credits.
4. Calculate Final Tax Liability:
   • If the total taxable income exceeds the tax credits, the remaining amount is your final tax liability.

Conclusion

It’s essential to stay informed about tax deadlines and ensure timely payments to avoid penalties. If you need assistance with calculating your tax liability or have any questions, feel free to reach out to a tax professional or the Department of Inland Revenue.

Remember, the final payment for the Year of Assessment 2023/2024 is due by 30th September 2024. Make sure to mark your calendars and prepare accordingly!