Your Guide to the February 15 Tax Deadline: Key Details You Should Know

Tax deadlines are an essential part of financial planning. February 15 marks the third installment deadline for income tax payments for the financial year 2024/2025. Meeting this deadline helps taxpayers stay compliant and avoid penalties.

Let’s break down what this means for you and how to ensure you stay compliant.

What is the 3rd Installment Payment?

As a taxpayer, you are required to estimate and pay your annual income tax in four equal installments. These payments help you distribute your tax burden throughout the year rather than facing a lump sum at the end.

Here’s the official tax payment schedule:

By February 15, taxpayers must pay the third installment of their estimated income tax.

Who Needs to Pay on February 15?

The third installment payment applies to all taxpayers who have taxable income, including:

• Corporate Income Tax
• Individual Income Tax
• Partnership Income Tax

Ensuring timely payment helps taxpayers stay compliant, avoid penalties, and manage their tax obligations efficiently.

How to Submit?

You have two options for SET submission:

• Estimated Tax Calculation: If you’ve earned income between October 1, 2024, and December 31, 2024, estimate your tax and pay your third installment accordingly.
• Nil SET Submission: If your tax calculation for 2024/2025 isn’t finalized yet, you can submit a Nil SET for the third quarter. You’ll have the chance to update and submit accurate estimates in the fourth quarter or before September 30, based on actual income.

Choosing the correct submission method ensures accuracy and compliance with tax regulations.

Calculation Requirements

Before finalizing your tax installment, ensure you have the necessary documentation:

• Current year income projection: Actual details and Budgeted details 
• The previous year’s final tax assessment notice
• Documentation for allowable deductions, such as:
  • Business expenses
  • Capital allowances
  • Charitable contributions
  • Interest payments

Having these documents ready will help ensure accurate tax calculations and prevent errors in tax filings.

How to Make the Payment?

You have multiple payment options:

1. Online Payment

• Log in to the IRD e-Services Portal
• Go to “Tax Payments > Income Tax Installments”
• Enter payment details:
  • Assessment Year: 2024/2025
  • Installment Number: 3
  • Tax Types Codes:
    • Corporates – 02
    • Individual – 05
    • Payment Period Code – 24253
  • Select the DIN number and add your payment

2. Bank Payment

• Obtain a payment voucher from the IRD website
• Fill in the required fields (TIN, taxpayer name, payment period, and amount in words/numbers)
• Present the voucher at authorized banks (BOC, HNB, etc.)

3. IRD Office Payment

• Carry original NIC/TIN card
• Submit a duplicate payment voucher
• Obtain a stamped receipt as proof

Choosing the right payment method ensures a smooth and timely transaction.

Checklist Before Filing Your Tax Payment

Before making your payment, ensure:

• Verify Taxpayer Identification Number (TIN)
• Check previous installment payment receipts
• Ensure the SET form has been submitted
• Review financial statements (if revising estimates)
• After submitting the SET form, you must also submit the SET Credit Schedules based on this quarter’s details.

Completing this checklist minimizes errors and helps ensure a hassle-free payment process.

What Happens if You Miss the February 15 Deadline?

If you fail to file and pay your third installment on time, you may face serious penalties:

Penalties for Late or Incorrect SET Submission

1. Failure to Submit SET – A penalty of up to LKR 1 million under Section 185 of the IR Act.
2. Underpaid Tax Due to Incorrect SET –
   • 25% penalty on the underpaid amount if it’s a minor error.
   • 75% penalty if the underpaid amount exceeds LKR 10 million or 25% of the total tax liability (Section 180).
3. False or Misleading SET – A penalty of LKR 50,000 or the amount understated, whichever is higher (Section 181).
4. Willful False Reporting – A fine of up to LKR 1 million or imprisonment up to 1 year, or both (Section 190).

Penalties for Late or Missed Installment Payments

1. Late or Nonpayment – 10% penalty on unpaid tax if not paid within 14 days (Section 179(2)).
2. Tax Evasion – A fine of up to LKR 10 million, imprisonment of up to 2 years, or both (Section 189).
3. Interest on Late Payment – 1.5% interest per month on unpaid installments (Section 159(1)).

Ensuring accurate and timely submission helps avoid severe penalties.

How Can Simplebooks Help You with the 3rd Installment Payment?

Missing the February 15 tax deadline can lead to penalties, interest charges, and compliance issues. Simplebooks makes the process easy, helping you stay compliant and stress-free.

Let us handle your tax calculations and payments so you can focus on your business. Contact Simplebooks today to ensure your third installment payment is accurate and on time.

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