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kass
kass
Top contributor
Top contributor
Posts : 470
Join date : 2014-02-27

New Single Withholding Tax of 2.5%......! Empty New Single Withholding Tax of 2.5%......!

Wed Apr 01, 2015 10:16 pm
Message reputation : 100% (2 votes)
The new Gov has done major changes to the WHT as per below circular issues by inland revenue.

http://www.inlandrevenue.gov.lk/publications/circulars/2015/SEC_2015_02_-_Withholding_tax_on_interest_paid_by_Banks_or_others_E.pdf

They have removed the income thresholds applicable for individuals. Hence we do not need to handover WHT declarations hereafter (that's what I understood)

However they have introduced a new WHT of 2.5% applicable to all individuals (except senior citizens) which is charged irrespective of the tenor of your deposit or your income capacity.

Even If you have a 3 month FD at 6% p.a you have to pay WHT of 2.5% at maturity Evil or Very Mad  This is not a good news for FD holders. Very Happy

Like to know your ideas on this guys.
First Guy
First Guy
Posts : 2599
Join date : 2014-02-22

New Single Withholding Tax of 2.5%......! Empty Re: New Single Withholding Tax of 2.5%......!

Thu Apr 02, 2015 6:36 am
I think it's ok.

Earlier WHT exemption was for those with income less than 600,000/- per year (50,000/- per month) so only those will be negatively affected as others were anyway paying at least 2.5%

For 100,000/- 3 month FD at 6% the WHT amounts to 37.50/- Smile
smallville
smallville
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Top contributor
Posts : 1872
Join date : 2014-02-23
Location : Trying to figure out..

New Single Withholding Tax of 2.5%......! Empty Re: New Single Withholding Tax of 2.5%......!

Thu Apr 02, 2015 7:26 am
Withholding tax is applicable to the interest income you earn.. So its not a big amount.

However, if Credit cards interests are reduced to 16%, its gonna be a good saving.
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serene
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Posts : 4850
Join date : 2014-02-26

New Single Withholding Tax of 2.5%......! Empty Re: New Single Withholding Tax of 2.5%......!

Thu Apr 02, 2015 7:38 am
Thanks kass for sharing.
Now ppl dont have to submit false declarations. Smile
Hybrid
Hybrid
Posts : 745
Join date : 2015-02-03
Location : Colombo

New Single Withholding Tax of 2.5%......! Empty Re: New Single Withholding Tax of 2.5%......!

Thu Apr 02, 2015 8:03 am
I think it is a good idea.

No need to track the tax dodgers.
Simple system for the banks
No need of forms
No head ache for some finance companies to balance the three present slabs for tax: Zero %, 2.5% and 8%.
But the MOST benefit is that we need not produce more children so that the deposits are made in their names!! lol! lol!

Most of the deposits are spread within the family to avoid taxes. On average the IR will benefit to some degree and bring in more revenue for the Govt.

At least some good thoughts are coming through!


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balapas
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Posts : 762
Join date : 2014-02-23
Age : 44

New Single Withholding Tax of 2.5%......! Empty Re: New Single Withholding Tax of 2.5%......!

Thu Apr 02, 2015 10:00 am
I think this is a good move since tax dodging can be avoided. Big hassle to fill the WHT forms every year and go to the banks/finance co's to hand over. (need to hand over otherwise if posted say did not receive) and was mentioned will be taxed 10% if not send it. Dont know whether ppl were charged unknowingly.

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