Abolishing WHT and plight of senior citizens
The new government of President Gotabaya Rajapaksa announced a series of tax reductions which brought relief to many, but unfortunately, much heart-burn for us, senior citizens.
The large majority of senior citizens are totally depending on the interest income we receive from our life-time savings to spend the evening of our lives without being a burden to others. There are many senior citizens who have even sold their ancestral properties and invested the money for this purpose. During the regime of President Mahinda Rajapaksa, the Withholding Tax (WHT) on interest income was only 2.5 per cent, and it was later increased to 5 per cent (after giving a tax-free allowance of Rs. 125,000 per month) by the Yahapalana Government. As the WHT is a “once and for all” tax, the interest income was not subjected to further taxes.
Current President Rajapaksa’s Government has now totally abolished the WHT from interest income with effect from April 1, 2020. This means that we, senior citizens will have to pay income tax on the interest income of over Rs. 250,000 per month. Most of us, senior citizens totally depend on the interest income for our living expenses (plus medical and hospitalisation expenses and also provide for our funerals). As a result of totally abolishing the WHT on interest income, we, the senior citizens will be compelled to:-
1. Pay income tax at the progressive rates of 6 per cent, 12 per cent and 18 per cent, which are very much higher than the WHT of 5 per cent which was being charged by the Yahapalana Government.
2. Open income tax files and fill laborious income tax returns every year. We will have to hire the services of Tax Consultants to do this work for us, which means an added financial burden.
3. Pay income tax quarterly – i.e. four times a year.
The Deputy Commissioner General – Tax Policy has confirmed that as per the tax regulations which would be effective from April 1, even the senior citizens whose only source of income is interest income from their savings, will have to open tax files, send the annual returns and make the quarterly tax payments if his/her monthly interest income exceeds Rs. 250,000.
We, the senior citizens whose only source of income is interest income (and who depend entirely on this income to spend the evening of our lives) are the only category of people who will suffer as a result of the tax proposals of the new government. We have no one to take up our cause other than the newspapers. Therefore, we earnestly appeal to your newspaper to highlight our plight in your esteemed journal and request President Rajapaksa to subject the interest income of senior citizens to a “once and for all” WHT of 5 per cent on the interest income over Rs. 250,000 per month, and save us from the agony of paying income tax at higher rates, opening tax files, filling laborious tax returns every year and making payments four times a year. I am 72 years old and I shudder to think that I will be compelled to do all these from April 1.
A.N.Silva Colombo