Interest on fixed deposits

Monday, 19 January 2015 00:10 - - {{hitsCtrl.values.hits}}

I wish to congratulate Maithripala Sirisena for being appointed as the Executive President of this country on 9 January. All should extend their

cooperation for a bright Sri Lanka. Interest on fixed deposits is very important to all, especially the senior citizens (those over 60 years) who have retired and settled down in life. The present interest is low and is in the range of 6%. Senior citizens: In accordance with the Budget Proposals 2015, and subsequent announcements, a concessionary rate of 12% is offered on up to total deposit of Rs. 2,500,000 per person w.e.f. 1 January 2015, earning a total interest of Rs. 300,000/- p.a. (maximum). Further, finance companies are also authorised to offer 13.01% for one year deposits. This is not compulsory. According to the election manifesto of the then Opposition party, interest of 15% was offered on the first Rs. 1,000,000 which should be followed with 12% on the balance of Rs. 1,500,000, which increases the total income to Rs. 330,000/- p.a. (maximum). Therefore, finance companies also should be authorised to offer 15-01% or 16-01% on the first Rs. 1,000,000/- and 13-01% on the balance Rs. 1,500,000. Non senior citizens: Up to 31 December 2014 withholding tax on interest on up to a limit of Rs. 500,000 was exempt (individuals and charitable organisations). Regrettably this was withdrawn in the Budget Proposals 2015, and 2-1/2 withholding tax is payable on the entire interest income. This is a blow to the low income group. The statutory allowance of Rs. 500,000 on income is denied to the earners of interest income only. This is a discrimination and discouragement for savings and deposits. Therefore interest on fixed deposits up to the limit of Rs. 500,000 should be made exempt from withholding tax as before (individuals and charitable organisations). It is better to have discussions with reputed professional organisations and offer this early. Early action on this matter is expected by all citizens. S.R. Balachandran Wellawatte