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Steps in calculating income tax withholding

There is no official online calculator provided by the tax authorities for calculating withholding. The steps in the process are outlined as follows:

Step 1: determine gross income in the pay period.

An individual's income from an employment for a year of assessment shall be the individual's gains and profits from the employment for that year of assessment. The gains and profits include all cash and non-cash benefits from employment (2.1.1).

Step 2: make allowable deductions.

Residents and non-resident citizens , are entitled for deduction of relief of Rs 1,200,000 for each year of assessment. This relief cannot be deducted by any individual who is a non-resident and non-citizen for a year of assessment.

(Inland Revenue Act No 10 of 2021, accessed at Gov.lk)

Example of steps 1 and 2

Step 3: apply the correct tax table and the