LNP – New tax regulations take effect from today

The Inland Revenue Department has announced that individuals earning less than Rs. 1.8 million annually can now claim relief on the advance income tax (AIT) charged on interest or discounts from deposits.

To avail themselves of this tax relief, eligible individuals must submit a self-declaration to their respective banks or financial institutions. The Inland Revenue Department has instructed these institutions to implement a 10 percent reduction in AIT on interest and discounts payable to depositors, effective from today (01).

As per the new directive, banks and financial institutions operating as withholding agents must deduct a 10 percent AIT on interest, discounts, and income derived from Islamic financial transactions originating in Sri Lanka. However, individuals whose annual assessable income does not exceed Rs. 1.8 million can reclaim the deducted amount by submitting a self-declaration detailing their total income.

Revisions to Personal Income Tax and Other Levies

Alongside the AIT relief, the government has revised personal income tax regulations. Effective today, the taxable monthly income threshold has been increased from Rs. 100,000 to Rs. 150,000, offering tax relief to lower-income earners.

Additionally, a 15 percent tax on income from services provided to foreign countries has been implemented under amendments to the Inland Revenue Act.

Meanwhile, stamp duty on lease and rental agreements has also been revised. Previously set at Rs. 10 per Rs. 1,000 or part thereof, the fee has now been doubled to Rs. 20, the Ministry of Finance confirmed.