Slew of amendments to Inland Revenue Act

The Finance Ministry yesterday announced a slew of amendments to the Inland Revenue Act passed in 2017.  

The summary of Cabinet-approved amendments to the Inland Revenue Act included Withholding Tax (WHT) on earnings from Government securities exempt of any gain including interest, discount or capital gain earned by non-residents of sovereign bonds in local and foreign currency issued by or on behalf of the Government:

Exemption from income tax of foreign earnings remitted to Sri Lanka through a bank on or after 15 November 2018.

Exemption of interest income payable on or after 15 November 2018, to any person holding NRFC & RFC accounts in any commercial bank with the approval of the Central Bank from income tax.

Interest Income exempted from WHT shall not be subjected to income tax as well. Amounts in excess of all such exemptions shall be liable for WHT at a rate of 5% with effect from 1December 2018, which will be the final tax.

Increased of exemption applicable on the interest income of senior citizens from Rs.150,000 per year to Rs.300,000 per year.

Exemption of interest Income up to Rs.50,000 per month subject to Rs. 500,00 per annum on any savings and fixed deposits maintained by individuals including joint deposits of individuals in any financial institution.

Income tax rate on Small and Medium Enterprises of Individuals,maximum 14% income tax rate to the income of individuals falling within the category of Small and Medium Enterprises, with effect from 1 April.

Exemption of interest earned by children under 18 years of age, on deposits maintained in any financial institution from Income tax.Reduction of WHT applicable on the payment of rent from 10% to 5% of the rent.

Withholding tax on interest on loans of non-residents exempted of interest paid to any person outside Sri Lanka on loans granted to the Government of Sri Lanka by such persons. Withholding tax on royalties exemption of royalty payment not exceeding Rs.50,000 per month subject to a maximum of Rs.500,000per year of assessment.     

WHT on interest on loans of non-residents - exempted of interest paid to any person outside Sri Lanka on loans granted to the Government by such person.