Loading...
Loading...
APIT and WHT are both mechanisms for collecting tax at source, but they cover different income types and have very different rules about creditability. Getting them confused is one of the most common errors in DIY tax filing.
APIT is the tax your employer deducts from your monthly salary, governed by Section 83A of the Inland Revenue Act. Employers use Tax Table No. 01 to compute the deduction; the table is calibrated against the annual personal relief, so deductions begin only once monthly regular profits exceed Rs. 150,000 (= Rs. 1,800,000 ÷ 12).
APIT is always creditableagainst the employee's annual income tax liability. Section 83A(3) deems APIT to be withholding tax for the purposes of the Act, and Section 89(2) entitles the employee to a tax credit equal to the amount deducted. In practice, an employee whose only income is salary and whose APIT has been correctly computed often does not need to file a return at all.
WHT is the broader regime for tax deducted at source on income other than salary. The Amendment Act No. 2 of 2025 formally renamed this mechanism Advance Income Tax (AIT), but practitioners still use WHT. Whether the deduction is final (no further action) or creditable (claim against your annual liability) depends on the income type.
| Income type | Rate | Final or creditable | Section |
|---|---|---|---|
| Bank interest (resident individual) | 10% | Final | s.88(1)(b) |
| Dividends from resident company | 15% | Final | s.88(1A)(aa) |
| Rent ≥ Rs. 100,000/month | 10% | Creditable | s.84A(1A) / s.89(2) |
| Rent < Rs. 100,000/month | 0% | n/a | s.84A(1A) |
Treating a final WHT as if it were creditable produces two errors at once: the income gets added to total income when it should not be, and a credit gets claimed when none is allowed. That overstates assessable income, pushes more income into higher slabs, and then double-counts the tax already paid. The right mental model: interest and dividends are settled at source — they stay out of your return entirely. Rent and APIT flow through your return — the deductions reduce your final liability as credits.
Senior citizens (aged 60+) get an additional layer on interest: Rs. 1,500,000 per year of interest income is free of WHT entirely, provided a declaration is filed with the financial institution. Above that threshold, the 10% final WHT resumes.
Common follow-ups on this topic.
If APIT correctly covers your full annual tax liability and you have no other income, yes — you generally do not need to file a return. APIT is creditable under Section 89(2), so the amount your employer deducted offsets your total liability when the return is filed. If you have other income, APIT only covers the employment portion.
No. Bank interest paid to a resident individual is subject to 10% final WHT under Section 88(1)(b). It is excluded from your progressive tax calculation entirely — you do not add the interest income to your total income, and you cannot claim the WHT as a credit. The 10% is the complete tax on that interest.
No. Dividends paid by a resident company are subject to 15% final WHT under Section 88(1A)(aa). Like interest, dividends are excluded from your progressive tax calculation and the WHT cannot be claimed as a credit. The 15% deducted by the company is the only tax on that dividend.
Rent WHT is creditable. When rent of Rs. 100,000 or more per month is paid to a resident individual, the payer deducts 10% under Section 84A(1A). Unlike dividends and interest, rent is not classified as final under Section 88 — the recipient adds the rent to their total income and claims the WHT as a credit under Section 89(2).
Generally no, if APIT has been correctly deducted and employment is your only income. But if you have additional sources — freelance work, rental income, foreign income, or capital gains — you may still need to file even if your APIT is correct. The annual return reconciles all sources of income and credits against the final liability.
Taxable handles personal relief, slabs, quarterly instalments, WHT, and APIT credits automatically as you record transactions.
Verified against the Inland Revenue Act No. 24 of 2017 (as amended by Amendment Act No. 2 of 2025). Last reviewed .