February 20, 2020
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    Inland Revenue Department to clamp down on errant traders Featured

    January 18, 2020
     

    The Inland Revenue Department (IRD) has found that a large number of traders, business establishments and bakeries do not pass the VAT reduction benefits to the consumer and as such the IRD would round up errant commercial establishments with the assistance of the Consumer Affairs Authority (VAA) and take legal action against them, Commissioner General of the IRD Nadun Guruge said.Mr. Guruge added that the IRD did not have provisions to take legal action directly against commercial ventures who fail to reduce their prices of commodities following the recent tax cuts but the CAA has been empowered to do so. The island wide raids on errant trade establishments and legal action will be launched starting from the last week of this month.


    Mr. Guruge said the government has granted a series of tax relief to the people to fulfill a pledge given by President Gotabaya Rajapaksa in his election manifesto.“Unfortunately, we have found that a fair number of traders and business establishments have failed to pass the benefits of tax cuts to the consumer as expected by the government and they have only used the tax reduction to enhance their profit margin," Mr. Guruge said.
    Mr. Guruge said the VAT rate has been reduced to 8% from 15% with effect from December 01, 2019. The liable threshold for registration of VAT has been increased to 75 million rupees per quarter or 300 million rupees per annum with effect from January 01, 2020.
    Nation Building Tax (NBT) has been abolished with effect from December 01, 2019 tax free limit of the PAYE tax has been increased from Rs. 100,000 to Rs.250,000 per month, with effect from January 1, 2020.“Amount exceeding tax free limit is liable for PAYE tax at the progressive rate of 6%, 12% and 18% on the monthly tax slab of Rs. 250,000,” he added.
    The maximum tax rate has been reduced to 18% from 24%. As such, the progressive rate applicable on personal income is revised to 6%, 12% and 18% and the tax free limit and the tax slab is revised to Rs.3 million per annum, with effect from January 1,2020. Payments subject to maximum of Rs.100,000 per month or Rs. 1.2 million per annum will be deductible, calculating the Personal Income Tax, with effect from April 1,2019. Health expenditure including contributions to medical insurance, educational expenditure incurred locally, payment of interest on housing loans, contribution to an approved pension scheme and expenditure incurred for the purchase of equity or security.
    The 40% income tax rate is limited to the manufacture and sale or import and sale of any liquor or tobacco product, with effect from April 1, 2019. Corporate Income Tax Rate will be revised with effect from April 1, 2020 on exports, tourism, education, medicare, construction and agro processing to 14%. 14%
    The PAYE tax will be removed. Income tax rate applicable on terminal benefits is revised with effect from January 1, 2020. Accordingly, the first Rs. 10 Million – exempted, next Rs. 10 Million - 6% and the balance - 12% Interest paid up to Rs. 250,000 per month to any person shall be exempted from withholding tax (WHT), with effect from January 1, 2020.Mr. Guruge added that prices of essential commodities have to be dropped with the tax cuts.

     
     
    Last modified on Saturday, 18 January 2020 13:07

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