Govt. to increase income tax threshold by Rs. 50k

The increase in the income tax threshold from Rs. 100,000 to Rs. 150,000 per month is likely to be implemented by next month, to incentivise more individuals to comply with the mandatory income tax registration, highly placed sources said.

This move is aimed at increasing the number of tax files and ultimately enhancing transparency in the taxation system, they added.

They also noted that this is a move to increase the disposable income of citizens struggling for the past few months.

Starting

February 1, 2024, mandatory income tax registration for citizens above 18 was announced by the Presidential

Media Division, with only those earning over Rs.

100,000 per month liable to pay. Obtaining a tax registration number becomes essential for routine activities, aiming to enhance transparency in the taxation system.

The government's efforts to increase the number of tax files have shown some success, with the number rising from 437,547 in 2022 to 1,002,029 by the end of 2023. However, there is still a need for further increase to achieve the government's objectives.

In addition to increasing the number of tax files, the government has also been successful in increasing the state revenue as a percentage of the GDP. It has risen from 8 per cent in the past year to 10 per cent by the end of last year. The government aims to further elevate this figure to 12 per cent by the end of 2024 and set a target of reaching 15 per cent by 2025, indicating its commitment to establishing a stable economy.

It is estimated that over 1,000,000 Sri Lankans can pay income tax, but only half of those are paying right now.

The government's efforts to increase the number of tax files have shown some success, with the number rising from 437,547 in 2022 to 1,002,029 by the end of 2023. However, there is still a need for further increase to achieve the government's objectives.