Savings interest taxed higher under new tax law, so are foreign currency deposits
The interest on savings made by Sri Lankans have been made liable for a higher withholding tax by the new Inland Revenue Act, which was passed in parliament last week, a business forum in Colombo was told yesterday.
Accordingly, the government will deduct 5.0 percent of the interest received from all savings by Sri Lankans, barring senior citizens, but that is also up to a certain level when the interest is given to the deposit holder at maturity. Currently, the government keeps 2.5 percent of the interest of individual depositors as the withholding tax, a change from the previous practice of step-up rate
applicable on depositors based on their annual income from deposit interest. However, the interest received by a senior citizen up to Rs.1.5 million per annum has been exempted from the withholding
tax, said Ernest & Young Partner Nishthar Sulaiman, at a seminar on the new Inland Revenue Act held at the National Chamber of Commerce, yesterday.