(COLOMBO, LANKAPUVATH) –The series of tax concessions offered by the new Government aimed at ushering in a new economic revival under the guidance of Prime Minister and Finance Minister Mahinda Rajapaksa became effective from yesterday.
These incentives include the total exemption of the Nation Building Tax, the reduction of Income Tax (PAYE) ranging from a minimum of 6% to a maximum of 24% to a 18% maximum of the repayment of loans taken under various sectors including the Small and Medium Scale Enterprises sector.
The public and the business community could avail themselves of these concessions from now onwards, Treasury Secretary S.R.Attygalle said yesterday.
The Treasury Secretary said it was not only the public and entrepreneurs who could make themselves use these facilities, but also the private sector and banking and financial institutions as well.
He also said that the Finance Ministry will take measures to brief and enlighten employees of both the state and private sectors as well and that too, from the highest to the lowest ranking employee.
He said the Government will strictly monitor the progress of these implementation and ensure that there will be no violations of these Government directives.
He also explained that the enforcement of these regulations should be made from the Presidential Secretariat down to Ministries and Departments as well.
Commissioner General of Inland Revenue Nadun Guruge said the limit on Income tax has been raised from Rs. 100,000 to 250,000 and presently, only employees who draw a salary of Rs. 250,0000 per month and above are liable to pay income tax and that process was operational for both state and private sector employees as well.
Guruge said that the minimum tax on a salary of Rs. 250,000 was 6% and the maximum of 18% in contrast to a maximum of 24% which prevailed during the last regime.
This would also mean that people whose incomes were Rs. 250,000 and above would be paying 6% and those who were earning Rs. 350,000 and above would be paying 12% and a maximum of 18% for those above those.
The total exemption of the Nation Building Tax which was at 2% and the reduction of VAT which was at 15% to 8% was also aimed at benefitting the people, he said.
He said that the tax reductions also saw the public benefitting with the price reductions.
He also said that the simplified tax structures and theincentiveswhich were provided for exports would also see that more money would be circulated among the members of the general public.
The Government will recover these losses provided through the reduced taxes from the reduction of state expenditure.
What has been happening all this time has been that there has been a raising of 20-80% of the Government expenditure through direct taxes which would be reduced to 40-60%.
The Commissioner General of Inland Revenue also believed that there would be a revival of the economy with all the concessions which have been allocated to the agriculture, fisheries and SME sectors. It was also decided at a meeting between the Central Bank officials and the heads of private and state banks at Temple Trees on December 24, 2019 to waive/defer the capital repayments from the SMEs, Special Advisor on Economic Advisor to the Prime Minister Ajit Nivard Cabraal said.