Obligation to file a return
Income Tax Returns for individuals
An individual who is in receipt of emoluments, pension or deriving income from trade, business, profession, agriculture, rents and other sources should fill in a return of income if he:
-
is registered at the MRA ,i.e has been allocated a Tax Account Number
-
derives a chargeable income whether he is registered or not
-
Net Income exceeding the Income Exemption Threshold (IET) Category A per year
-
Gross income from business exceeding Rs 2 million per year
-
Emoluments from which tax has been withheld
-
Income which has been subject to tax deduction at source
Calculation of chargeable income
Chargeable income = Gross Income – allowable deductions – Exemptions and reliefs.
Allowable deductions include expenditure incurred in the production of income ,losses ,bad debts and annual allowance(instead of depreciation)
Tax Rates
An individual having an annual net income :
-
Not exceeding Rs 700,000 : 10%
-
Exceeding Rs 700,000 but not exceeding Rs 975,000 : 12.5%
-
Exceeding Rs 975,000 : 15%