Withholding Tax (On Specified Fees Be Other Payments)
Every specified person should deduct income tax as WHT on the given rates from any specified fee payable to any person or any partnership at the time such specified fee is paid.
Specified person
In relation to any year of assessment, any person, partnership or body of persons, who or which either on his or it's own behalf or on behalf of any other person or persons or partnership or partnerships, is likely to pay or credit in that year of Assessment or has paid or credited in the year of assessment immediately preceding that year of assessment, specified fees aggregating to not less than one million rupees.
Specified Fees
In relation to any year of assessment any sum aggregating to not less than
1) Rs. 50,000 is for any month in that year of assessment or
2) Rs. 500,000 in that year of assessment
payable by any specified person to any person or partnership in consideration of services rendered by that person or partnership as the case may be in the course of any business, profession, Vocation or other activities of an independent character carried on or exercised by that person or partnership but does not include employee in the course of employment.
Registration
Every specified person should be registered at the withholding tax branch (on specified fees) of the Inland Revenue Department and obtained S.P.Number.
Procedure for Withholding Tax (WHT)
WHT should be deducted from all the liable payments at the specified rates or as per direction obtained by that person.
The direction is valid only for the period of one year assessment, as specified by the WHT Branch, where the direction is issued. (If there's any ambiguous with regards to validity period, tax rate or the Institutions covered by the direction, an inquiry could be made and confirmation could be obtained from the WHT Branch)
WHT should be calculated on the VAT exclusive Value.
WHT deducted on specified fees should be remitted through the allocated peoples Bank
A/C No 0141001101110428 of the Commissioner General of Inland Revenue.
Registration Number (SP No.) should be indicated in paying-in-slips, schedules, back page of the cheques and all the correspondence in relating to WHT. (please submit duly filled paying in slips
(4 copies) with the cheque to WHT Branch. Tax Payer's copy will be returned)
Tax deduction certificates should be issued using the specimen form to the suppliers at the time of the deduction of tax.
WHT Tax direction
Any Supplier who is not satisfied with the deduction of WHT at the specified rates can apply for a direction in order to reduce the rates under Section 154 read with Section 139 of the Inland Revenue Act.
Registered income tax payers could obtain the WHT direction from the Inland Revenue Regional Office, where tax file is maintained.
Non tax payers could obtain the WHT direction from the WHT Branch at 1st floor (North Wing) of the Inland Revenue Building, Chittampalam A. Gardiner Mawatha, Colombo 02.
Please Note that,
WHT on specified fees is not a final tax.
The tax deducted could be claimed as a credit against the tax payable.
In case where there is no liability, the tax withheld could be claimed as a refund at the end of the assessment year, on a written request.
Deduction of WHT is not required on institutions exempt under Sec. 7 of Inland Revenue Act. (However, directions may be obtained)
Withholding Tax Rates
A. Specified Fees - in terms of Section 153
i. Payments made for constructions - 1%
ii. Payments made for Registered Samurdhi Societies
Farmers' Organizations, Rural Development Societies,
School Development Societies for obtaining any service - 1%
iii. Payments made for supply of goods under tender or quotation - 5%
iv. Rents paid for the buildings used for residential purposes - 5%
v. Commission brokerage or any payment in similar nature - 5%
vi. Payment made for any other service - 5%
B. Management Fees or similar payments - in terms of section 160 - 5%
C. Rent, lease rent or other payments made for specified land or buildings used for non residential purposes- in terms of Section 155 - 10%
D. Annuities and Royalties - in terms of Section 160 - 10%
E. National Gem & Jewellery Authority shall deduct income tax at the rate of 2.5% from the sale price of Gem sold at the auction. This is a final tax. (in terms of Section 161 - A (1))
Returns
1. Monthly Schedule along with the copy of the paying in slip should be sent to the withholding tax branch (specified fees) on or before 15th of the following month.
2. No such specified payment has been made for any particular month 'Nil'
schedule could be furnished for that month.
Payment of Tax
Payments could be made on or before 15th of the following month using WHT I form and the relevant cheque should be referred to withholding tax branch of the Inland Revenue Department, Chittampalam A. Gardiner Mawatha, Colombo 02 along with WHT form and Schedules.
More Details
WHT (on specified fees) Unit - 2324796
Tax Payer Service Unit - 2328702
Secretariat Unit - 2338635
