An individual whose leviable income exceeds 3 million rupees is liable to an additional solidarity levy which is calculated at the rate of 25% of the leviable income in excess of 3 million rupees.
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 –
by virtue of any enactment;
from a superannuation fund; and
under a personal pension scheme approved by the Director-General
Solidarity Levy (SL) on Emoluments
Employers should henceforth also deduct solidarity levy (SL) at the rate of 25 % in respect of employees who derive emoluments in excess of Rs 3 millions annually.
In the month where an employee’s salary exceeds Rs 230,769, his employer will withhold 25% SL on the excess of emoluments received. However, the SL deducted must not exceed 10% of the total emoluments.
Lump sum payments under the Pension Act, the Superannuation Fund or Personal Pension Plan are not liable to Solidarity Levy.
Employee has submitted EDF
Solidarity Levy (SL) has to be withheld from the emoluments of the employee on a cumulative basis at the rate of 25 %. However, the maximum deduction is limited to 10 % 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.