New taxes effective from next April

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By 2017-09-14

All provisions in the new Inland Revenue Act (IRA) will come into effect from 1 April 2018, the Ministry of Finance said in a press release.

"For the convenience of the tax payers, all taxes imposed by the new IRA would only come into effect on the above date.

Accordingly,...... capital gain tax, remittance tax, withholding tax and Pay As You Earn (PAYE) tax ,which was to be effective from October 2017, would come to effect in April next year. The new income tax structure would also be effective on this date, as proposed earlier," the release said.

It added that this decision was made in a bid to avoid complications arising from having to keep two different types of accounts in order to implement the Act in two different ways. Accordingly, the new tax collection date was set by the Treasury, as advised by the Minister of Finance, Mangala Samareweera.

It further states that there are no grounds for several speculations on the new tax structure, including the taxing of the income of religious institutions. Also, the taxes on earnings of Sri Lankans working abroad would remain the same. The interest incomes on deposits of senior citizens have a tax exemption up to Rs 125,000 per month, therefore, in order to be liable to tax, a senior citizen should own a deposit exceeding Rs 150 million.

The release further states that under new IRA, the annual limit for exemptions of PAYE tax has been increased from Rs 750,000 to Rs 1.2 million, which frees a fragment of employees currently liable to PAYE from it from the new financial year.

The release adds that companies listed on the Colombo Stock Exchange and the profits from trading stocks are not liable to capital gains tax. Also EPF is not liable to tax under the new IRA. The release further states that the new IRA has not imposed taxes on the service fees of hospitals. Private hospitals are liable to tax as companies, and this tax was increased from 12 to 28 per cent of the profits the respective hospital make at the end of the financial year. Accordingly, this would not result in an increase of the hospital charges on patients, the release adds.

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