As enacted

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Inland Revenue Act 2006 · As enacted · Chapter II · Income Chargeable with Tax

4. Profits from employment

Official English translation. The Sinhala text prevails. Open the official Sinhala text, official PDF on documents.gov.lk

(1)

Profits from any employment include—

(a)

(i)

any wages, salary, allowance, leave pay, fee, pension, commission, bonus, gratuity, perquisite or such other payment in money which an employee receives in the course of his employment;

(ii)

the value of any benefits to the employee or to his spouse, child or parent, including the value of any holiday warrant or passage;

(iii)

any payment to any other person for the benefit of the employee or of his spouse, child or parent, whether received or derived from the employer or others ;

(b)

the value of any conveyance granted free of any charge by an employer to any employee, or any sum so granted for the purchase of any conveyance;

(c)

(i)

any retiring gratuity or any sum received in commutation of pension;

(ii)

any sum paid from a provident fund approved by the Commissioner-General to any employee at the time of his retirement from such fund, other than such part of that sum as represents his contributions to that fund;

(iii)

any sum paid from a regulated provident fund to an employee other than—

(A)

such part of that sum as represents his contributions to that fund; and

(B)

such part of that sum as represents the contributions made by the employer to that fund prior to April 1, 1968, and the interest which accrued on such contributions, if tax at the rate of fifteen per centum has been paid by such employer in respect of such contributions and interest;

(iv)

any sum received as compensation for loss of any office or employment;

(v)

any sum paid from the Employees Trust Fund established by the Employees’ Trust Fund Act,

No. 46 of 1980 ;

(d)

the rental value of any place of residence provided rent-free by the employer or where a place of residence is provided by an employer at a rent less than the rental value, the excess of the rental value over such rent.

For the purpose of this paragraph the rental value of any place of residence shall be–

(i)

the net annual value as defined in section 5

with the addition of the rates paid by the owner and of thirty three and one-third per centum of such net annual value on account of repairs and other expenses; or

(ii)

the gross rent paid for such place of residence, whichever is higher :

Provided that, for any year of assessment, any excess of the rental value—

(A)

over one hundred and twenty thousand rupees, where the aggregate of profits referred to in paragraph (a), does not exceed one hundred and fifty thousand rupees ;

and

(B)

over one hundred and eighty thousand rupees where the aggregate of the profits referred to in paragraph (a), exceeds one hundred and fifty thousand rupees, shall be disregarded ;

(e)

the value at the time of its disposal, of any share of a company received as a benefit from the employer or on behalf of the employer at no cost or at a price which is less than the prevailing market value of such share of that company, whether directly or through a share option scheme.

The value at the time of its disposal of such share shall be the surplus over the cost of acquisition of such share—

(i)

in the case of a sale, the sale price or the market value of such share as at the date of sale, whichever is higher;

(ii)

in the case of disposal otherwise than by way of sale, the market value of such share as at the date of disposal;

(iii)

in the case of an employee ceasing to be in the employment of such employer without selling or disposing of such share, the market value as at the last date of his employment with such employer, which date shall be deemed to be the date of the disposal of such share:

Provided however, in the event of the death of such employee during his period of employment with such employer, the value of such share shall be zero.

For the purpose of this paragraph, the profits from employment arising in accordance with the preceding provisions shall be charged with income tax in the year of assessment during which such sale, disposal or cessation of employment took place, on the basis that such profits form the sole taxable income within the meaning of Chapter VII for that year of assessment, and such tax shall be recovered in accordance with the provisions of Chapter XIV of this Act:

Provided that where the employer was not instrumental in the disposal of such share, such employee shall pay the tax due on such profit from employment in accordance with the provisions of

Chapter XIII of this Act.

(2)

For the purposes of this section, “the value of any benefit”, in relation to an individual who has received, or derived such benefit, means–

(a)

where the market value of such benefit can be readily ascertained, such market value; or

(b)

where the market value of such benefit cannot be readily ascertained or such benefit has no market value, the cost that would have to be incurred by any other individual to obtain such benefit:

Provided that the Commissioner-General may, having regard to the market value of that benefit or the cost that would have to be incurred by any other individual to obtain that benefit, by Order published in the Gazette, specify the value to be placed on any benefit, and where a value is so specified in respect of a benefit, such value shall be deemed to be the value of such benefit.

Read on from s 5

Chapter III