Self determination of own income tax liability

By Laxman Amarakoon

Key Factors: First Period means a period from 01.04.2019 to 31.12.2019

Second period means a period from 01.01.2020 to 31.03.2020.

 

ILLUSTRATION – 01

Dr. Silva is a government medical officer. Dr. Silva received the following income during the year of assessment 2019/2020

                                                                      First Period (Rs)                    Second Period (Rs)

Employment Income                                            1,440,000                                        510,000

Paye Tax deducted                                                      25,200                                           –

Private Medical Practice Income                       1,800,000                                        800,000

5% of WHT duly paid                                                 90,000                                           –

 

Interest income (WHT duly paid)                      1,500,000                                      520,000

Expenses incurred for education locally              325,000                                       400,000

 

As well he donated Rs. 25,000 to Government Approved Charity during the First Period of the Y/A 2019/2020.

 

ILLUSTRATION – 02

Mr. Perera is a professional lawyer. His Legal Practice Income and Interest Income for the Y/A 2019/2020 are as follows.(Assume that he is a senior citizen)

                                                  First Period (Rs)                     Second Period (Rs)

Legal Practice Income                   1,291,000                                    510,000

Interest Income                               400,000                                 1,200,000

ILLUSTRATION – 03

Mr. Fernando is acompany Director.He received following income during the year of assessment 2019/2020.

                                                                    First Period (Rs)                 Second Period (Rs)

Director’s Remuneration                               1,125,000                                    375,000

Profits from Sole Proprietorship                 1,960,000                                    950,000

Rent income (WHT duly paid)                        225,000                                    75,000

Withholding Tax paid on Rent Income

Personal medical expenses incurred                                                                 500,550

 

 

• PARTNERSHIPS

• It was proposed that every Divisible Taxable Partnership share of Profit will be liable to Tax with effect from 01.04.2020 and its calculation is as follows;
• The First Rs. 1,000,000/- out of Taxable Aggregate Share profit is not liable for Partnership Tax and Balance share of profit will be Taxed at 6% PA on the excess of Rs. 1,000,000/-.
• The paid Partnership Tax credit can be obtained by the partners in their Individual Tax Returns proportionately against their share of other Taxable income.
• If Partnership Taxable income consists of Gains on realization of investment assets , taxed @ 10% PA.