ASSIGNMENT

TAXATION
ACC-31063

Lecturer in charge: - A.M.Sheham

Prepared by:-
A.L.Fathima Nuska
SEU/IS/09/COM/046
3rd Year 1st Semester
Faculty of Management and Commerce

SOUTH EASTERN UNIVERSITY

OLUVIL
Content:-
 Explain the self assessment scheme under the Inland
Revenue Act no.10 of 2006?
 How can a taxpayer avoid liability to pay penalties in
respect of tax payable under the self assessment scheme?
 State five conditions to be satisfied for a valid appeal
against a notice of income tax assessment issued by an
accession?
 A person or partnership liable to income tax is required
to compute his or its tax and remit it in four quarterly
installments, although no assessment has been made
explain this statement with the following headings.
o Direct assessment-
o Penalty for nonpayment or due date
o Notice to defaulters
o Recovery of tax in default
1. Explain the self assessment scheme under the Inland
Revenue Act no.10 of 2006?
Any income tax which any person or partnership is liable to pay under this Act for any
year of assessment shall be paid by such person or partnership to the Commissioner-
General in four installments on or before the fifteenth day respectively of August,
November and February in that year of assessment and the fifteenth day of May of the
next succeeding year of assessment, not withstanding that no assessment has been made
on him or it by an Assessor. Each such installment is hereinafter referred to as a
“quarterly installment”.

The quarterly installment of a tax payable by any person or partnership for any year of
assessment shall be one quarter of the tax payable by him or it for that year of assessment.

Notwithstanding anything contained in sub section (1) and subsection (2) of this section,
the entirety of the tax payable:—

(i) By any company resident in Sri Lanka

(ii) By any company not resident in Sri Lanka

Shall be paid on or before the thirtieth day succeeding the date of distribution of such
dividends or making such remittances, as the case may be;

By any company resident in Sri Lank shall be paid on or before the thirtieth day of
October of that year of assessment for which such tax is payable.

The amount of any quarterly installment of income tax payable by any individual for any
year of assessment shall be reduced by ten per centum thereof, if such individual pays the
amount of such quarterly installment as so reduced, not less than thirty days prior to the
date on or before which such installment is required to be paid under subsection (1);
where any individual has so paid the amount of any quarterly installment as so reduced,
such individual shall be deemed for all purposes to have paid such quarterly installment
without any reduction.
 2. How can a taxpayer avoid liability to pay penalties in respect
of tax payable under the self assessment scheme?
Where any income tax for any pay period payable by any employer under the provisions
of this Chapter is in default, such employer shall pay in addition to such tax–

A penalty of a sum equivalent to ten per centum of such tax; and where such tax is not
paid before the expiry of thirty days after it has begun to be in default, a further penalty of
a sum equivalent to two per centum of the tax in default in respect of each further period
of thirty days or part thereof, during which it remains in default:

Provided that—

(i) the Commissioner-General may waive or reduce the amount of any such
penalty payable by any employer, if such employer proves to the satisfaction
of the Commissioner-General that the failure to pay was due to circumstances
beyond his control and that he has paid the amount of the tax in default and
has furnished the declaration required to be furnished at the time of such
payment;
(ii) the total amount payable as penalty under the preceding provisions of this
section, shall in respect of the tax in default for any pay period, not exceed
fifty per centum of the tax in default.

3. State five conditions to be satisfied for a valid appeal against

a notice of income tax assessment issued by an accession?
If a person is dissatisfied with an assessment made under the Act, he should make an
appeal to the commissioner General against the assessment

The appeal is to be valid; the following conditions should be satisfied

 The appeal should be in writing

 Addressed to the Commissioner General
 Within 30 days of the notice of assessment
 If the assessment is in the absence of a return, together with the return duly filled.
 The tax on return must be paid and the payment receipt attached.
 Should state precisely the grounds of such appeal.
4. A person or partnership liable to income tax is required to
compute his or its tax and remit it in four quarterly
installments, although no assessment has been made explain
this statement with the following headings.

a. Direct assessment-
Every person chargeable with income tax for any year of assessment is required to
furnish a return of his income on or before 30 th November following the year end
of that year of assessment. The return should be in such form and containing such
particular specified by the commissioner general.
Tax has to be paid quarterly in four equal installments on or before.
 15th August
 15th November
 15th February
 15th May of the succeeding year of assessment

b. Penalty for nonpayment or due date

If the tax payer doesn’t pay tax he has to pay penalty for non compliance
 Where tax is in default, a penalty of 10% is added.
 If not paid within 30 days or part there of the penalty is 2% for every 30
days or part thereof,
 Maximum penalty is 50%
 Commissioner general has power to waive or reduce the penalty

c. Notice to defaulters
Before taking recovery action, the commissioner general should issue a notice
(notice of tax in default) in writing starting
 Particular of tax in default and
 That recovery action is being contemplated

However the commissioner general has power to recover the tax without notice
d. Recovery of tax in default

a. Taxes deemed to be default;

1. Self assessment tax (quarterly installment) or any part thereof not paid on
or before the due date.
2. Tax as per assessment not paid as specified in the notice of assessment.

b. Before taking recovery action the commissioner general should issue a notice
in writing stating
 Particulars of tax in default
 That recovery action is being contemplated.

c. If the defaulter has not appealed against the assessment on which the tax is due,
he can make an objection within 30 days from the date of Notice. This is not an
appeal and the commissioner General’s decision is final.
Reffernce:-

 Inland Revenue Act 10 of 2006

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