Govt. contemplates tax relief
The Sri Lankan government has proposed to the International Monetary Fund (IMF) to offer personal income tax relief by adjusting the tax brackets, according to Finance Ministry sources.
Its proposal involves increasing the threshold for personal income tax from Rs.500,000 to Rs.720,000 and also includes the Treasury’s proposal of maintaining the same threshold of Rs. 1.2 million annually while expanding the tax band and keeping the top tax rate at 36 per cent as previously announced.
The IMF, after reviewing the proposal, recommended providing more relief to lower tax brackets, maintaining similar relief for mid-level taxpayers, and slightly reducing relief for higher earners while keeping the essence of the proposal intact.
The IMF had suggested retaining the Rs.1.2 million tax-free threshold but extending the first tax band from Rs.500,000 to Rs.1 million with subsequent bands shifting up by Rs.500,000, while maintaining the top tax rate at 36 per cent, ministry sources said.
The government is currently evaluating these proposals and considering the IMF’s recommendations.
On a related note, Sri Lanka’s Inland Revenue Department (IRD) exceeded its tax collection targets for the second consecutive quarter, collecting Rs.902 billion in the first half of 2024, surpassing its target of Rs.826 billion, an official of the IRD disclosed.
IRD Commissioner General Sepalika Chandrasekara noted that the IRD will achieve 60 per cent of its annual tax collection target in the second half of the year, as most tax payments are due during this period.
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