NBT has been abolished with effect from December 01, 2019.
Value Added Tax (VAT)
VAT rate has been reduced to 8% with effect from December 01, 2019
other than in respect of the following.
Supply of Financial Services continues at 15%.
VAT rate on supply of services by a hotel, guest house, restaurant
or other similar business providing similar services, registered
with Sri Lanka Tourism Development Authority, has been revised to
Zero per centum (0%) with effect from December 01, 2019, if not
less than 60% of the total value of the inputs are sourced from
local supplies/ sources.
[Inputs from local supplies/ sources means the total expenditure
incurred for the purchase of locally produced agricultural,
horticultural, fishing, animal husbandry or dairy products and any
goods manufactured locally with minimum 10% local value addition,
for the taxable period which ended prior to the commencement of
the taxable period immediately preceding the taxable period for
which the zero per centum (0%) VAT rate applies]
Import of goods for specified H.S. Codes (Fabric) is Zero per
centum (0%). [HS Codes are specified in the Extraordinary Gazette
Notification 2095/20 dated November 1, 2018]
VAT registration threshold has been increased with effect from
January 01, 2020, up to LKR 75 million per quarter or LKR 300
million per annum subject to formal amendments to the Value added
Tax Act, No. 14 of 2002, to be passed in Parliament.
Accordingly, VAT Registration of persons of whose taxable supplies
have never exceeded LKR 75 million for any taxable period ended
prior to December 31, 2019, has been inactivated with effect from
January 01, 2020 and a list of such inactivated VAT registered
persons with the details of name of the person and VAT registration
No. also has been published.
Such inactivated persons are not permitted to collect VAT on the
supplies made on or after January 01, 2020. Further, such persons
are required to surrender their VAT Registration Certificate to the
Commissioner, Customer Information Update Unit of the Inland Revenue
head office or nearest regional office.
In line with inactivating VAT registration, SVAT registration of
such persons will also be inactivated with effect from January 01,
2020.
As instructed by the Ministry of Finance on December 20, 2019, and
approved by the Cabinet of Ministers, supply of residential
accommodation by way of sale of Condominium housing unit by any
person is exempt from VAT with effect from December 01, 2019.
Economic Service Charge (ESC)
ESC has been abolished with effect from January 01, 2020.
Debt Repayment Levy (DRL)
DRL has been abolished with effect from January 01, 2020
Withholding Tax (WHT)
Aggregate of interest income from all deposits of a senior citizen
(resident in Sri Lanka who is sixty years or above at any time
during the year of assessment) up to the tax relief available under
paragraph 2(d) of the FIFTH SCHEDULE to the Inland Revenue Act,until
March 31,2020 (subject to the declaration made under 2018 Circular
by such senior citizen whose aggregate interest income is not more
than Rs.1,500,000 per annum)
In the case of a senior citizen,tax relief available under Paragraph
2 (d) of the FIRST SCHEDULE to the Inland Revenue Act will be
continued until March 31,2020.If the interest income exceeds such
relief ,on the excess over the relief amount ,be withheld at the
rate of five per centum (5%)
Aggregate Interest income or discount from all the accounts
including Islamic financial transaction in a bank or a financial
institution ,to an account holder (Other than a senior citizen) up
to Rs.250,000 in a month for the period from January 01,2020 to
March 31,2020 is exempt from WHT. WHT will apply at 5% on the amount
in excess of LKR 250,000.
If any Bank or Financial Institution has deducted withholding tax
(WHT) from the account of any senior citizen in the case where the
aggregated interest payment has not exceeded Rs.1,500,000 for the
whole year of assessment (from 01.04.2019 -31.03.2020) ,such
deducted amount should be refunded to senior citizens.
If Bank or Financial Institution has not deducted withholding tax
(WHT) or deducted WHT partly from the account of any senior citizen,
in the case where the aggregated interest payment exceeded Rs.1,
500,000 for the whole year of assessment (from 01.04.2019
-31.03.2020) ,following details of such senior citizens should be
submitted to the Commissioner (Information and Forced registration )
of this Department.
Name of the senior citizen
Address
NIC No
Amount of Interest paid for the year of assessment.
WHT on service fees payable to any resident Individuals which was
levied at 5% on amounts exceeding LKR 50,000 has been removed with
effect from January 01, 2020.
WHT on dividend, charge, natural resource payment, rent, royalty,
premium or retirement payment made to residents will be removed and
such income will form a part of assessable income,w.e.f April
1,2020.
WHT on partner’s share will be removed and the taxable income of the
partnership excluding Rs.1 million per annum will be subjected to
Partnership tax at the rate of 6% ,w.e.f April 1,2020
Income Tax and Withholding Tax (WHT)
Income Tax (IT)
Exemptions
Farming, Agriculture, Fisheries, and Livestock income (from April 1,
2019)
IT and enabling services income (from January 1, 2020)
Export of services income in foreign currency (from January 1, 2020)
Interest on NRFC and RFC accounts (from April 1, 2020)
Interest on foreign loans (from April 1, 2018)
Sovereign Bond income for non-residents (from April 1, 2018)
Interest or discount on Sovereign Bonds in foreign currency (from
April 1, 2018)
Funds received by Public Corporations from Parliament/Government
loans (from April 1, 2018)
Dividends paid to non-residents (from April 1, 2020)
Income from lab/standards certification services for non-residents
(from April 1, 2020)
Income Tax Qualifying Payments
Payments by Public Corporations to Consolidated Fund (from April 1,
2019)
Personal income tax deductions (from April 1, 2020) up to Rs.
1.2M/year:
Health expenditure (including medical insurance)
Local educational expenditure
Housing loan interest
Approved pension scheme contributions
Equity/security purchases
Income Tax Rate Changes
Liquor/tobacco products: 40% rate (from April 1, 2019)
Personal income tax: Revised to 6%, 12%, 18% with Rs. 3M tax-free
threshold (from January 1, 2020)
