Income Tax (Amendments to the Inland Revenue Act, No.24 of 2017)
1.1 The requirement of filing the Statement of Estimated Tax payable (SET) will be removed with effect from the Year of Assessment 2025/2026.
1.2 Provisions will be introduced to calculate the amount of each instalment of tax payable by any person for a year of assessment, based on the income tax payable by such person for the immediately preceding year of assessment.
1.3 Any amount derived, by any non-resident person as any payment for air craft, software licenses or as for other related services from the Sri Lanka Air Force, will be exempted.
1.4 i Withholding tax will not be deducted by a financial institution from the interest paid on deposit made with that financial institution by any senior citizen, whose assessable income from all sources does not exceed Rs.1,800,000/- for any year of assessment and if such individual tenders a declaration to the financial institution confirming his assessable income.
ii Any Individual, other than senior citizen, whose assessable income from all sources does not exceed Rs.1,800,000/- for any year of assessment, will be entitled to a refund of WHT deducted on interest under the refund scheme presently applicable for senior citizens.
ii Relevant guidelines including the format of the declaration, will be issued by the Commissioner General of nland Revenue (CGIR).
1.5 Senior citizens will be allowed to file their income tax returns manually, starting from the year of assessment 2024/2025.
1.6 Provisions will be introduced in the Act clarifying the chargeability of income tax on the life insurance proceeds and other amounts received by policy holders.
1.7 The current tax treatment provided under Section 46 of the Inland Revenue Act, which applies to the transfer of ownership of an asset to an associate of an individual or a charitable institution, will be expanded to include the transfer of assets to the Sri Lankan Government or to a university established or deemed to be established under the Universities Act, No. 16 of 1978.
1.8 The Capital Gain Tax (CGT) rate applicable for individuals and partnerships will be increased to 15%. The CGT rate applicable for all other entities will be raised to 30% in par with the corporate capital gains tax rate.
1.9 The CGIR will be authorized to waive interest imposed under the provisions of the Inland Revenue Act, No. 24 of 2017, and the Surcharge Tax Act, No.14 of 2022, if; the tax liability has arisen for the year of assessment 2022/2023 or any previous Y/ A, and,the total amount of tax should be paid within six months of the statutory amendment.
The tax resident rules will be re-visited to provide for the followings: –
i. A holder of Golden Paradise Resident visa will be treated as a non-resident for income tax purposes;
ii. Any individual who is deemed to be a resident for income tax purpose only due to the reason of he is being employed in a Sri Lanka flagged vessel, will be treated as a resident in Sri Lanka during the period he is so employed; and
iii. Any individual who is a citizen or subject of any country other than Sri Lanka, but deemed to be a resident in Sri Lanka due to the reason of he is being employed in a Sri Lanka flagged vessel, will not be liable to income tax as a resident in respect of any income that has no source in Sri Lanka, other than his income from employment in such ship
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