Statement of Estimated Income Tax Payable – Income Tax Calculation

Updated 2024

The article covers the following:

1. What is a Statement of Estimated Income Tax Payable or SET?
2. How do you estimate your payable tax amount?
3. Who should submit a Statement of Estimated Income Tax Payable?
4. When do you have to submit your SET?
5. Due dates for quarterly payments
6. How do you calculate your quarterly estimated income tax installment payments?
7. Deductions and important points to remember
8. Non-compliance and it’s penalties
9. Submit your SET forms with Simplebooks!

If it’s time for you to submit your ‘Statement of Estimated Income Tax Payable’ or ‘SET’ again and you’re still struggling to understand the in’s and out’s of the whole process, here’s a comprehensive guide that’ll come in handy. 

Let’s start with the basics. 

What is a Statement of Estimated Income Tax Payable or SET? 

In a Statement of Estimated Income Tax Payable (SET), you basically estimate the total amount of tax you’ll have to pay for the next financial year (2024/2025).

You can estimate the total payable tax by first estimating the total profits you’ll make for the upcoming financial year. 

It’s important to remember that you ‘estimate’ these amounts. 

This is because you cannot know for certain the exact profits you’ll make within a financial year. 

Since you cannot know exact profits, you won’t know the exact tax you’ll have to pay on your profits. 

How do you estimate your payable tax amount?

Step 01: Make an estimate of your profits at the end of the 2024/2025 financial year.

Step 02 : Estimate how much tax you’ll have to pay for your estimated profit. 

After you make these estimates, you have to mention them on your Statement of Estimated Income Tax Payable form and submit it to the Commissioner General at the Inland Revenue Department. 

Who should submit a Statement of Estimated Income Tax Payable? 

If you’re an individual or a business that’s;

1. Registered with the Department of Inland Revenue (IRD)

AND

2. Has a Tax Identification Number (TIN) 

you have to submit a Statement of Estimated Income Tax Payable (SET). 

When do you have to submit your SET?

You have to submit this form on the 15th of August every year to the Commissioner General and make payments on your income tax on a quarterly basis. 

Remember, these quarterly income tax payments are made on your estimated profits and not your real profits. 

Due dates for quarterly payments

Here are the due dates for your quarterly payments: 

After you make your final quarterly payment on the 15th of May 2025, you’ll have to make one last final payment on or before the 30th of September 2025.

There are a couple of things you should remember when you’re making your final payment : 

• You should only make your final payments (on or before 30th Sept 2025) after you’ve audited your finance records. 
• This means that the final payment you make will not be based on your estimated profits, it will be based on your actual profits.  
• If there were any differences between the estimated payable income tax and the actual income tax amount (based on your actual profits), you’ll have to pay the difference on or before the 30th of September 2025.
• After you’ve settled your final payments on the 30th of September 2025, you have to submit a formal document that shows your audited tax returns on the 30th of November 2025.

How do you calculate your quarterly estimated income tax installment payments?

If you don’t have a dedicated accountant or a financial service calculating your SET for you, and you’re doing it on your own; here’s how the payment amounts are calculated for each quarter :   

We’ve defined these terms for you: 

• Estimated tax payable – The tax amount that you think you’ll have to pay for the upcoming financial year (2024/2025). This is calculated based on the estimated tax amount you’ll have to pay for your estimated profit.

• Previous installment payments – If you’ve made any advanced quarterly income tax payments up until now, you can deduct it. For example; if you’ve made tax payments in June or February, you can deduct that amount for your next quarterly installment.

• Advanced Income Tax (AIT)  and Withholding tax (WHT) –  If you’ve paid any tax payments in advance, you can deduct that.   

Deductions and important points to remember 

When you’re calculating the upcoming quarterly installment payments, there are a few things to remember. 

• The estimated tax amount (SET) that you calculate will be relevant for the entire upcoming financial year.

• However, if your estimated tax amount for the next financial year either increases or decreases suddenly and you want to change the initial estimated tax amount you’ve filed, you’ll have to submit a revised SET to the Commissioner General with the new tax estimates.  

• If you’ve given a tax estimate that is lower than the actual amount of tax that you have to pay for the financial year, you will have to submit a cause for the difference to the Commissioner General in your revised SET forms.

Non-compliance and it’s penalties

Penalties for late/missing or incorrect SET filing

1. If you fail to submit the SET, you could be fined up to 1 million rupees under Section 185 of the IR Act. 
2. Underpaying taxes due to an incorrect SET and material omission in the SET, penalty will be imposed under section 180 of the IR Act in the amount of-

1. 25% of the underpayment, if (b) does not apply; 
   or 
2. 75% of the underpayment, if the amount of the underpayment is-

1. higher than ten million rupees or 
2. higher than the 25% of the person’s tax liability for the period.

3. If your SET has false or misleading information, you could be fined 50,000 rupees OR the amount of tax you understated, whichever is higher under section 181 of the IR Act.
4. Even worse, if you intentionally lied on the SET, you could face a fine of up to 1 million rupees or be imprisoned for up to a year, or even both! (Section 190).

Penalties for late/missed or evaded installment payments.

I. Penalty for nonpayment /late payment – (Under Section 179 (2) of the IR Act)

If you don’t pay your full installment within 14 days of the due date, you’ll be charged a 10% penalty on the unpaid amount.

II. Fine and imprisonment – (Under Section 189 of the IR Act)

If you intentionally avoid making your installment payments, things get serious. You could face a fine of up to 10 million rupees or be imprisoned for up to 2 years, or even both!

III. Interest on under payment (Under Section 159 (1) of the IR Act).

On top of penalties, you’ll also be charged interest at 1.5% per month on any unpaid installment amount. This interest starts accruing from the original due date.

Submit your SET forms with Simplebooks!

Hey, we’re Simplebooks – a registered tax advisor. 

This means that Simplebooks is capable of calculating and submitting your SET forms for you. 

If you need help submitting your SET forms by the 15th of August this year, you can contact us.