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 Reliefs, Deductions & Allowances 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 is taxed on his annual chargeable income as follows :-
|
Annual Chargeable Income |
Rate of Income tax |
Annual Chargeable Income |
Rate of Income tax |
|
First Rs 390,000 |
0% |
Next Rs 300,000 |
12% |
|
Next Rs 40,000 |
2% |
Next Rs 300,000 |
14% |
|
Next Rs 40,000 |
4% |
Next Rs 400,000 |
16% |
|
Next Rs 60,000 |
6% |
Next Rs 500,000 |
18% |
|
Next Rs 60,000 |
8% |
On the remainder |
20% |
|
Next Rs 300,000 |
10% |