Solidarity Levy (SL)  - Abolished as from 01 July 2023

• An individual whose leviable income exceeds Rs 3 million is liable to a solidarity levy which is calculated at the rate of 25% of the leviable income in excess of Rs 3 million.

• Leviable income is the chargeable income of the individual and dividends paid to him by a resident company and a co-operative society registered under the Co-operative Act 2016.

• With effect from income year 2019-2020, a person has to declare as part of his leviable income his share of dividend concerning to a societe in which he is an associate.

• However leviable income does not include any lump sum by way of commutation of pension or by way of death gratuity or as consolidated compensation for death or injury, and paid –

  1. by virtue of any enactment;

  2. from a superannuation fund; and

  3. under a personal pension scheme approved by the Director-General

Solidarity Levy (SL) on Emoluments

Employers should henceforth calculate cumulative PAYE for Solidarity Levy (SL) where, in a month, the cumulative chargeable of the employee, excluding any lump sum payable by way of commutation of pension or of death gratuity, exceeds SLET*.

The rate applicable is:

• 25% of the cumulative excess; or
• 10% of the cumulative emoluments (excluding any lump sum payable by way of commutation of pension or of death gratuity),

whichever is the lower.

The PAYE for SL, for the current month, is then calculated by deducting, from the cumulative PAYE for SL, the PAYE for SL withheld in previous months of the income year. The PAYE for SL to be deducted from the emoluments of an employee in a month shall, in any case, not exceed 15% of the emoluments for the month.

*SLET - is the sum of the amount of solidarity levy exemption threshold, and is calculated by multiplying Rs 230,769 (3,000,000 ÷ 13) by the number of months from July to the current month.

Employee has submitted EDF

Solidarity Levy (SL) has to be withheld from the emoluments of the employee on a cumulative basis at the rate:

• 25% of the cumulative excess; or
• 10% of the cumulative emoluments (excluding any lump sum payable by way of commutation of pension or of death gratuity),

whichever is the lower.

The PAYE for SL, for the current month, is then calculated by deducting, from the cumulative PAYE for SL, the PAYE for SL withheld in previous months of the income year. The PAYE for SL to be deducted from the emoluments of an employee in a month shall, in any case, not exceed 15% of the emoluments for the month.

The first Rs 3 million of an employee’s leviable income is not liable to solidarity levy. For monthly SL calculation, employees are allowed a Solidarity Levy Exemption Threshold (SLET) of Rs 230,769 (Rs 3,000,000/13). In December, in view of the end of year bonus, twice the monthly amount of SLET should be allowed.

No EDF submitted

Where an employee has not submitted an EDF and his emoluments for any month exceed Rs 230,769, the employer should deduct Solidarity Levy at the rate of 25% of the amount in excess of Rs 230,769. However maximum deduction is limited to 10% of the emoluments for the current month.

However, the PAYE for SL to be deducted from the emoluments of an employee in a month shall, in any case, not exceed 15% of the emoluments for the month.

A person who, in respect of an income year, has not submitted an Employee Declaration Form, and derives emoluments,pension, annuity or similar payments not exceeding Rs 230,769 in a month, may request his employer/payer to withhold PAYE for SL at the rate of 10% or 25%; from such payments by completing the authorisation to deduct PAYE form which is available on MRA website.