Surcharge Tax Bill debate on 7 April

Monday, 28 March 2022 03:03 -     - {{hitsCtrl.values.hits}}

  • SC cleared Bill after considering several petitions challenging it 
  • Amendments to be moved at committee stage to exempt provident and pension funds from tax

 The Surcharge Tax Bill, which seeks to impose a retrospective one-time 25% surcharge tax on persons and companies with a taxable income over Rs. 2 billion for the year 2020/2021, will be taken up for debate on April 7.

The decision to debate and pass on Bill during the first sitting week for April was taken by the Committee on Parliamentary Business. Deputy Speaker Ranjith Siyambalapitiya presided at the meeting.

The Surcharge Tax Bill was cleared by the Supreme Court after it considered several petitions filed challenging it.

“On an overall consideration of the provisions of the Bill, we arrive at the conclusion that neither the Bill nor any of its provisions are inconsistent with Article 12 or 13 or any provisions of the Constitution. 

“In the circumstances, this Bill can be validly passed by a simple majority of the Legislature,” the three-member Bench of the Supreme Court said.

The Government will move amendments to the Bill during the Committee Stage debate to exclude pensions and provident funds from the payment of the supercharge tax.

This includes 13 pension and provident funds in banks and other State institutions as well as the Employees Provident Fund (EPF) and the Employees Trust Fund (ETF).

Under the provisions of the Bill, each company of a group of companies, of which the aggregate of the taxable income of all subsidiaries and the holding company in that group exceeds Rs. 2 billion for the year of assessment commenced on 1 April 2020, will be charged the Surcharge Tax.

The tax will be imposed on the income of each such company after deducting the gains and profits from dividends received from a subsidiary which is part of such taxable income of each such company, for such year of assessment, notwithstanding that the taxable income of any one of such companies does not exceed Rs. 2 billion.