The Inland Revenue Department (IRD) has begun investigations into depositors of Golden Key Credit (GK) Card Co. for non payment of taxes on interest income or investing large sums of money seeking high interest rates, IRD sources told The Sunday Times FT. The company is also being probed on tax issues.
The department a week ago sent letters to most of the GK depositors summoning them for an interview in batches to ascertain the failure to divulge details of their deposits and interest income. The first such interview was held on Tuesday, May 5.
Tax officers informed depositors that they should pay 35 % of the interest income received by them from GK from the date of the commencement of their transactions as the income tax and the fine for the defaulting of tax. There are over 7,000 depositors who have deposited sums of money ranging from Rs. 250,000 to Rs. 8 million and around 2,000 with deposits ranging from Rs. 8 million Rs. 200 million, IRD sources revealed.
President of the GK Depositors Association Anusha Emmert told The Sunday Times FT that depositors are not in a position to pay income tax at this moment as most of them are struggling to survive without a regular income. They were depending on the interest income and now they have no money ‘even to buy bread’. “The action of the IRD is like the attack of the bull’s horn on a man falling from a tree,” she said. Depositors from as far as Kurunegala and Kandy had been summoned to Colombo for this interview and it is very unfair on depositors who are distressed over losing of their money, Ms. Emmert said.
She added that “we are trying to find a legal redress to overcome this situation of falling from the frying pan into the fire”.
IRD sources said the department wants to ascertain how some of the depositors had acquired large sums of money and whether they had evaded the payment of taxes, in these investments. Finance companies normally deduct a 10% withholding tax on interest paid on deposits unless the depositor signs a declaration saying that his/her income was below a floor that entailed no tax liability.
No withholding taxes are deducted on such declarations held by the companies concerned, the sources said.
The department is also probing the due tax payment of GK amounting to nearly Rs.150 million of which Rs 73 million has been paid. |
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