Income Tax (IT)
Income tax is charged on the basis of the provisions of the Inland Revenue Act No. 10 of 2006 as amended by Inland Revenue Amendment Acts No. 10 of 2007, 9 of 2008, 19 of 2009, 22 of 2011, 8 of 2012, 18 of 2013 and 08 of 2014.
The Inland Revenue Act provides the legal authority to charge, levy and collect income tax on the profits and income of every person or partnership, which arose or is arising to such person for every year of assessment commencing on or after 1st of April, 2006.
Sources of Profit and income :
- Profit from a trade, business, profession or vocation
- Profit from employment
- Net annual value
- Dividends, interest or discount
- Charges or annuities
- Rents, royalties or premiums
- Winnings from a lottery, betting or gambling
- In case of a non-governmental organization, any sum received by such organization by way of grant, donation or contribution or any other manner
- Income from any other source except profit of a casual and non-recurring nature
In respect of a person who is deemed to be resident in Sri Lanka is chargeable with income tax in respect of his income from Sri Lanka and income derived by him from outside Sri Lanka. The liability to income tax therefore extends to his global income. A person who is deemed to be non-resident in Sri Lanka is chargeable with income tax in respect of only the profits and income, arising or derived from Sri Lanka.
Tax free allowance of Rs. 500,000 is available for an individual who is a Citizen of Sri Lanka or Non-Citizen but Resident in Sri Lanka.