President Anura Kumara Dissanayake said that increasing the withholding tax from 5 to 10 percent will not affect pensioners or anyone who lives solely on interest income.
The President said that the purpose of increasing the tax was to expand the tax net to collect taxes from high-income earners, adding that individuals and pensioners who live solely on bank interest will be provided an opportunity to go to the Inland Revenue Department and present their income status so that they would not be included in the tax.
President Dissanayake said that a separate unit will be set up in the Inland Revenue Department to consider these requests.
He said that an agreement has been reached with the International Monetary Fund (IMF) to increase the tax threshold on earnings from Rs. 100,000 to 150,000 per month.
Accordingly, the first bracket of personal income tax has been increased from Rs. 600,000 to one million rupees, subject to a six percent tax on income, and a person earning a salary of Rs. 150,000 is hundred percent tax exempted. A person earning a salary of Rs. 200,000 is exempted from tax by 71 percent, a person earning a salary of Rs. 250,000 is exempted by 61 percent, a person earning a salary of Rs. 300,000 is exempted by 47 percent and a person earning a salary of Rs. 350,000 is exempted by 25.5 percent. He said that since there was great concern among university lecturers, doctors, bank officials and other professionals regarding income tax.
This tax has been revised so that those with higher incomes receive less relief and those with lower incomes receive more relief. The President said so in Parliament on December 18 regarding the introduction of certain amendments to the agreements reached by the previous Government with the IMF to provide relief to the people.
