Statement of Estimated Income Tax – FAQs + Guide

Updated 2024

In this blog, we’ve answered some of the most common questions you would have had while preparing your Statement of Estimated Income Tax form (SET form).

Let’s jump right into it.

Table of Contents

What is a Statement of Estimated Income Tax Payable (SET)?
Who do I submit the form to?
When do I have to submit my SET?
When do I have to pay the estimated taxes mentioned in my SET?
When do I have to pick the revised statement when submitting SET?
How can I qualify for deductibles (qualifying payments/ relief)?
How can I estimate the tax based on my income?
How do I qualify for foreign tax credits?
What are the penalties for missing a SET or installment payment?

What is a Statement of Estimated Income Tax Payable (SET)?

If you earn over LKR 100,000 per month or up to LKR 1,200,000 for a year, then you need to file income tax.. 

Before you do this, you will have to inform the Government how much tax you owe them for the current financial year.

But, this seems a little tricky because you still haven’t completed the financial year, right? That is why you will have to estimate your tax amount.

This is where the Statement of Estimated Income Tax form comes in. The SET form will help you estimate how much income you will earn during the financial year, and based on this value, you can calculate how much tax you owe to the Government. 

These tax values are estimated for the year of assessment and then paid in four installments, once every three months. So, based on the estimation, you can make the payments quarterly (four times a year in total).

Who do I submit the form to?

Once you have completed the SET form, you can submit it by hand or through registered post to the Central Document Management Unit (CDMU), IRD Head Office, Chittampalam A Gardiner Mawatha, Colombo 02.

If you plan on physically submitting the SET you can also do it at any Regional Office available in your area.

You can now file your SET for the Year of Assessment (Y/A) 2023/2024 online through RAMIS on the IRD website. Log in to your RAMIS account and submit your return. Ensure you have all the required information and documents before submitting your return.

When do I have to submit my SET?

For every financial year of assessment, the first installment of the SET must be filed on or before the 15th of August 2024.

You need to submit your SET calculation for the entirety of the financial year (2024/2025 in this case) on the 15th of August 2024.

When do I have to pay the estimated taxes mentioned in my SET?

You will be paying the first quarterly payment as you submit your SET form on the 15th of August 2024.

After that, you’ve got four more installment payments to go.

Here is what your payment periods will look like:

Installment (quarter)	Payment due date
First instalment	15.08.2024
Second instalment	15.11.2024
Third instalment	15.02.2025
Fourth instalment	15.05.2025
Final payment (2024/2025)	30.09.2025

When do I have to pick the revised statement when submitting SET?

When you’re preparing your SET form, you will be asked whether you’re submitting:

1. Original statement OR;
2. Revised statement. 

If it is your first time filing for SET during the financial year, you can choose the ‘Original Statement’ option. 

In case you need to change any of the information you’ve mentioned on your Original Statement, you can submit a ‘Revised Statement’ (at any point during the financial year).

Your instalment payments for the remaining quarters will also change based on your Revised Statement. 

How can I qualify for deductibles  (qualifying payments/ relief)?

To qualify for qualifying payments, there are 5 possible ways:

1. Donate to an Approved Charity.

If you are the individual donor, you can choose between either 1/3 of the taxable income of the individual for that year of assessment or Rs. 75,000 as the deductible. The chosen value must be whichever is the lowest.

2. Donate to the Government or other specified institutions.
3. Profits remitted to the President’s Fund.
4. A contribution made by a resident individual to establish a shop for a female individual who is from the Samurdhi beneficiary family
5. Expenditure incurred by any person
   – in the production of a film at a cost not less than five million rupees
   – in the construction and equipping of a new cinema at the cost of not                                    exceeding twenty-five million rupees
   – in the upgrading of a cinema at a cost of not exceeding ten million Rupees
   – The deduction of this expenditure is restricted to one-third of the taxable income.

To qualify for reliefs, you need to qualify for: 

1. Personal relief 

If you are a resident or non-resident (but citizen) then you are entitled to a personal relief of LKR 1,200,000 for each year of assessment. 

However, if you are a person who also acts as the trustee, receiver, executor, or liquidator then this will not apply.

The relief may be deducted from the assessable income of an individual except to the extent that the assessable income comprises gains from the realisation of investment assets.

2. Rent relief 

If you are a resident you are entitled to a deduction of 25% on the total rental income from an investment asset for the year of assessment.

But if it is supposed to be claimed for any actual expenditures like repairs, maintenance, and depreciation of the investment asset, then it cannot be deducted.

3. Solar Panel Relief

Resident individuals who have acquired solar panels to fix on their premises and connected to the national grid are entitled to deduct Rs. 600,000 for each year of assessment, up to the total expenditure made on such solar panels or up to the amounts paid to a bank in respect of any loan obtained to acquire such solar panels.

How can I estimate the tax based on my income?

After you total your employment, interest, and business incomes, you get your value of ‘Estimated Assessable Income’. 

From this, you can deduct any reliefs and qualifying payments that you are entitled to. The value you are left with is the ‘Estimated Taxable Income’.

Individuals

Taxable Income Range (Rs)	Tax on Taxable Income equal to the lowest of the range	Tax rate on the excess taxable income over the lowest of the range
First 500,000	30,000	6 %
Next 500,000	60,000	12 %
Next 500,000	90,000	18 %
Next 500,000	120,000	24 %
Next 500,000	150,000	30 %
Balance	–	36 %

How do I qualify for foreign tax credits?

If you have access to a foreign investment income, you can receive a tax break. 

The foreign tax credit is limited to the amount of tax on the part of profits/ income that is related to the foreign tax credit. 

If you own or run a business abroad the company overseas can be taxed for this. 

However, if you are covered by a double tax agreement, which means your country has signed an agreement with the overseas country, then that company will not be taxed here

What are the penalties for missing a SET or installment payment

Penalties for late/missing or incorrect SET filing

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.

Additional resources for further reading:
Everything you need to know about Income Tax in Sri Lanka
Withholding Tax Sri Lanka? Here’s Everything You Need to Know