Economic Service Charge (ESC) has been administered since 1st of April 2006 under the Economic Service Charge (ESC) Act No. 13 of 2006, as amended by Economic Service Charge Amendment Acts No. 15 of 2007, 11 of 2008, 16 of 2009, 11 of 2011, 11 of 2012 and 06 of 2013. Prior to this, it has been administered under Finance Acts 11 of 2004 and 11 of 2005 from 01.04.2004 up to 01.04.2006. ESC operates as an advance payment of income tax in respect of any person whose liability to income tax exceeds the ESC liability and such person bears no burden of the ESC.
A person whose contribution to income tax does not exceed ESC liability, for instance in the case of a loss making business, ESC has to be paid and no deductions can be effected elsewhere. With effect from 01.04.2012, ESC is payable only by any person or partnership who or which enjoys tax exemption or has taxable losses.
Every person or partnership which carries on a trade, business, profession or vocation except Cooperative Societies, non resident aviation and shipping companies, local Government bodies and Government Departments, any distributer, any dealer in lottery, any unit trust of Mutual fund, or Central Bank of Sri Lanka will have to pay Economic Service Charge whether such person or partnership liable to pay income tax or not. The rate applicable is 0.25% on relevant turnover.
Every person or partnership should register for ESC if the turnover of a quarter is Rs. 50 million or more comencing on 01-04-2011. The maximum economic service charge to be paid for a quarter is limited to Rs. 30 million.
The amount due from every transaction whether actually received or not. But following are not included to the liable turnover.
ESC is payable on self-assessment basis in four quarters. Payments should be made using the specific paying-in-slip and the period of tax should be correctly indicated. (Ex. 30/06/2015 Quarter 15161)
ESC paid can be set off against the Income Tax payable for the relevant year of assessment. A balance, if any can be brought forward and set against the 4 subsequent years of assessments.
Due date :
Submit to :
Department of Inland Revenue, Sri Lanka,
Chittampalam A. Gardiner Mawatha, Colombo 02.
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