The Certificate of Income Tax Deductions, commonly referred to as the T-10, is an essential document prescribed under Section 87 of the Inland Revenue Act in Sri Lanka. This certificate plays a vital role for both employers and employees in the process of Advance Personal Income Tax (APIT) compliance.
Purpose of the T-10 Certificate
The T-10 Certificate is issued by employers to their employees as a formal record of the income tax deductions made during the relevant year of assessment. It serves two primary purposes:
- Proof of APIT Payment: The T-10 acts as proof that the Advance Personal Income Tax has been deducted and remitted to the Inland Revenue Department (IRD) by the employer on behalf of the employee. This ensures transparency and accuracy in tax-related matters.
- Employment Income Confirmation: In addition to confirming the tax deductions, the T-10 Certificate also verifies the total employment income earned by the employee from a specific employer during the relevant period.
Key Components of the T-10 Certificate
The T-10 Certificate contains several critical details, including:
- Year of Assessment and Employer’s TIN: These fields specify the tax year for which the certificate is issued and the Taxpayer Identification Number of the employer.
- Employment Information: The certificate distinguishes between primary and secondary employment, with a tick box to indicate the relevant category. This is crucial for employees who may have multiple sources of income.
- Employee Details: It includes the full name of the employee, the serial number from the employee’s pay sheet, and the National Identity Card (NIC) number.
- Service Period and Gross Remuneration: The period of service for which the remuneration was paid is clearly stated, along with the total gross remuneration as per the APIT pay sheet, including tax-on-tax amounts.
- Benefits and Deductions: The certificate provides a breakdown of cash and non-cash benefits, as well as any benefits excluded from tax calculations. Additionally, it outlines the total amount of tax deducted during the period.
- Amount Remitted to IRD: This section records the total amount of tax that has been remitted to the Inland Revenue Department.
- Certification by Employer: The employer’s signature and official stamp certify the accuracy of the information provided in the T-10 Certificate.
Importance for Employees
For employees, the T-10 Certificate is not just a record; it is a vital document for tax filing. Employees must attach this certificate to their Return of Income for the relevant year of assessment, even if the deducted tax amount is zero. This ensures that their tax filings are complete and accurate, avoiding potential discrepancies or penalties from the IRD.
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Certificate of Income Tax Deductions (T-10) for the Y/A 2023/2024
Conclusion
The T-10 Certificate is a cornerstone of the tax deduction process under the APIT system in Sri Lanka. By ensuring proper documentation and certification of income and tax deductions, it helps maintain the integrity of the tax system while providing employees with the necessary proof of compliance. Both employers and employees should be diligent in issuing, reviewing, and maintaining these certificates to ensure smooth tax processing.