Sri Lanka exempted Non-cash benefits from PAYE tax for employees

Sri Lanka Government has issued a circular exempting employees from paying PAYE tax on non-cash benefits such as for vehicles, fuel allowances, housing and medical benefits which have been provided to employees at their places of employment.

This circular has been issued by the Commissioner General of Inland Revenue Department on the instruction of the Secretary to the Ministry of Finance, Economic Stabilization and National Policies on Tuesday (February 07).

By this circular, the value of non-cash benefit from any residence provided by the employer has been revised to 12.5% of the salary.

The value of benefit from the private use (partly) of any motor vehicle provided by the employer has been revised to Rs. 20,000 from Rs. 50,000 and Rs. 75,000 for vehicles with engine capacity over 1800cc and below 1800cc, respectively. For drivers and fuel allowances, the value has been revised to Rs. 10,000 and Rs. 20,000, respectively.

The value of the benefit from private use of any motor vehicle used for field work, provided by the employer where an accurate record of such usage is maintained by such employer, amount of such non cash benefit will be Rs. 25 per km (irrespective of the engine capacity of the vehicle) but shall not exceed Rs. 20,000 per month.

Meanwhile, when any employee is entitled to receive a payment for communication facilities under any circular, directive or regulation issued on that behalf by the Government, 25% of the cost incurred by the employer for such payment should be the value of the benefit to the employee of such payment.

The circular calculates an employee’s gains and profits from January 01, 2023 and below is the full list of details.