![]() ![]() 10 of 2006.Īccording to the provisions of Inland Revenue Act No. Finance lease allowancesĪny profit, loss, receipt, or payment of a finance lease agreement entered into prior to 1 April 2018 can be computed in accordance with the respective provisions of the Inland Revenue Act, No. 24 of 2017 (subject to conditions) from the year of assessment 2018/19. 10 of 2006 can be deducted in accordance with provisions of the new Inland Revenue Act No. ![]() Investment and other allowancesĪny balance allowance as at 31 March 2018 deductible from assessable income under the Inland Revenue Act, No. In the case of the latter, there is no limit to the deduction however, any unclaimed excess of such contributions over the limit cannot be carried forward and deducted from the subsequent years’ assessable income. The deduction for the former is subject to a ceiling of one-fifth of the taxable income of the company or LKR 500,000, whichever is less. Any contributions in money or in kind to the government of Sri Lanka is also a qualifying payment. Qualifying Payment is available, as a deduction in calculation of taxable income, for the contributions in money to an approved charity, provided that the charity is established for the provision of institutionalized care for sick or the needy. In the case of a bank or a financial institution, deductibility of a specific bad debt provision as may be specified by the Commissioner General of Inland Revenue (CGIR) would be allowed. Bad debts and doubtful debtsĪ sum equal to the bad debts incurred in any business or investment that have become bad debts during the period for which the profits are being ascertained is allowed for tax purposes. Interest paid or payable on borrowings for purposes of business are deductible, subject to the thin capitalisation rules ( see the Group taxation section). Formation or liquidation expenses of a companyĮxpenses incurred in the formation or liquidation of a company (excluding capital nature expenditure) are allowed in computing the taxable income, as the business and investment are defined to include past, present, or prospective business/investment. GoodwillĬapital allowance is not granted on the acquisition of goodwill. ![]() plant and machinery) and qualified buildings constructed/acquired before 1 April 2018 can be computed and deducted as per the respective provision of the Inland Revenue Act No. The allowance for depreciation for capital assets (e.g. Milking machines with latest technology, used to manufacture local liquid milk related products Railroad cars, locomotives, and equipment vessels, barges, tugs, and similar water transportation equipment aircraft specialised public utility plant, equipment, and machinery office furniture, fixtures, and equipment any depreciable asset not included in another classīuildings structures and similar works of a permanent nature DepreciationĬapital allowance for depreciation of assets acquired/constructed is granted based on the number of years applicable to the relevant depreciable asset as follows: Depreciable assetsĬomputers and data handling equipment, together with peripheral devicesīuses and minibuses, goods vehicles construction and earthmoving equipment, heavy general purpose or specialised trucks, trailers, and trailer-mounted containers plant and machinery used in manufacturing In calculating the income from a business or investment for a year of assessment, expenses incurred during the year, in the production of income from the business or investment, are permitted to be deducted. ![]()
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