Statement of Estimated Income Tax Payable for the Year of Assessment 2019/2020(SET)

In terms of Sections 90, 91 and 92 of the IR Act, every person who is liable to pay income tax, is required to submit a SET Form for the year of assessment 2019/2020 on or before the 15th August, 2019. Furthermore, the estimated tax should be paid in four installments.

Issuance and Submission
Issuance
SET Form may be issued by the Commissioner General of Inland Revenue to the person who is chargeable with income tax and if not received could be obtained from the Taxpayer Services Unit at the IRD Head Office or from any Regional Office.

Submission
Duly completed SET Form can be furnished to the Central Document Management Unit (CDMU) at the IRD Head Office or to any Regional Office.
OR
SET Form can be sent through registered post to the Commissioner, Central Document Management Unit, Inland Revenue Department, Chittampalam A Gardiner Mawatha, Colombo 02.

How to calculate

As per the Section 90(3) of the Act, installment tax payable is to be calculated using following  formula:

                   Installment Payment =  (A - C) / B

A =Estimated Tax Payable 

B =Number of installments remaining including the current installment

C = Tax payments prior to that installment 

Estimated tax payable can be calculated only on the current year basis.(Previous year based estimate is not allowed though it was permitted in Y/A 2018/2019)

Following payments to be considered as payment for above Tax payments prior to that installment

a) Previous installment payments, and
b) any withholding tax payments (WHT)

paid /withheld prior to the due date of payment of the current installment payment.
In case if any payments have been made prior to making the installment, the actual quarterly tax installment to be calculated taking in to account those payments . Accordingly, the amount of actual tax installment to be paid may not be equal to the one fourth of the estimated tax payable.

Additional Deductions

While calculating the final quarterly installment payment, the following payments if any, could also be deducted from the calculated quarterly installment payment 
1. Any deductible Economic Service Charge (ESC) paid under ESC Act, No. 13 of 2006
2. Any advance installment payment for relevant quarter
3. Carried forward Notional Tax Credit (NTC)
The Final Quarterly Installment Payment would be the difference between Quarterly Installment Payment and Additional Deductions.

Ex: Estimated income tax payable of XYZ PLC for the  Y/A 2019/2020 is Rs.2,000,000.WHT credit up to 15th August 2019 is Rs.500,000.ESC paid for the first quarter of Y/A 2019/2020 is Rs.250,000.

Accordingly, amount payable for the first quarter of Y/A 2019/2020 is as follows.

Quarterly  Installment Payment =  (2,000,000 -500,000) / 4= Rs.375,000.

Final Installment payable =Quarterly Installment Payment -Additional Deductions

                                     = Rs.375,000-250,000

                                      =Rs.125,000

Penalty for late filing of the SET Form

A person who fails to submit the SET Form on or before due date, a penalty under section 178 of the IR Act shall be liable to pay.

Accordingly, penalty would be equal to the greater of;
5% of the amount of the tax owing, plus a further 1% of the amount of the tax owing for each month or part of a month during which the failure to file continues;
or
Rs.50, 000 plus a further Rs.10, 000 for each month or part of a month during which the failure to file continues.
(Maximum penalty shall be limited to Rs.400, 000)

Penalty for Late Payments

 A person who fails to pay shall be liable for following penalty ,

 a). 10% of the tax amount due, and

 b). Further, 1.5% interest of the tax amount due months or part of the month.

If you have anything to be clarified with regard to the above article, you can raise your question through a simple SMS