The recently proposed Inland Revenue (Amendment) Bill No. 569 of 2025 ( Issued on 21.02.2025) brings significant changes to the tax refund process in Sri Lanka. These amendments affect individual taxpayers, businesses, and senior citizens, altering the timeframes and limits for claiming tax refunds. Here’s a detailed breakdown of the changes and their implications.
Previously, under the Inland Revenue Act No. 24 of 2017, taxpayers had four years to request a refund of excess taxes paid. The new amendment reduces this period to 2.5 years (30 months).
Impact: Taxpayers must be more vigilant and file refund claims promptly. Any claims submitted after 2.5 years from the end of the relevant assessment year will no longer be valid.
The amendment modifies the refundable amounts for individual taxpayers:
Impact: This change benefits taxpayers who are eligible for larger refunds, particularly after April 2025. Those with overpaid taxes will be able to claim higher amounts, but they must ensure timely filing to qualify.
Under the new Section 150(4), from April 1, 2024, refunds or credits will only be processed if:
Impact: The new system provides more control over refunds, requiring taxpayers to follow stricter deadlines. It also prevents long-pending refund requests from accumulating at the Inland Revenue Department (IRD).
| Aspect | Before (Act No. 24 of 2017) | After (Bill No. 569 of 2025) | Impact |
|---|---|---|---|
| Refund request period | 4 years | 2.5 years | Less time to claim refunds |
| General refund limit (individuals) | Rs. 100,000 per year | Rs. 180,000 per year | Increased refund eligibility |
| Senior citizen refund limit | Rs. 25,000 per quarter | Rs. 45,000 per quarter | More benefits for senior taxpayers |
| Automatic refunds (by IRD) | No strict limit | Timeframe specified by Commissioner-General | More controlled refund system |