Govt. aims for Rs. 330 b via major revenue proposals

Saturday, 13 November 2021 00:30 - - {{hitsCtrl.values.hits}}

One-time 25% surcharge on taxable income of over Rs. 2 b and Social Security Contribution of 2.5% on turnover key moves to raising Rs. 240 b
VAT on banks and finance companies increased to 18% from 15%
Sin taxes resurface

The Government yesterday via Budget 2022 announced several new but one-time revenue proposals aimed at raising Rs. 33 billion.

A one-time tax surcharge of 25% is proposed on persons or companies with taxable income over Rs. 2 billion for the year of assessment 2020/2021. The Government hopes to raise Rs. 100 billion is expected to be earned through this tax.

Finance Minister Basil Rajapaksa said only around 60 companies would come under the new tax.

Another new tax is Social Security Contribution, which Basil said was aimed at rebuilding the economy affected by the COVID pandemic.

The contribution will be charged at 2.5% on the annual threshold turnover exceeding Rs. 120 million.

Government aims to raise Rs. 130 billion via this new move effective from 1 April 2022.

The Value Added Tax (VAT) on banks and financial service providers will be increased to 18% from 15% payable monthly from 1 January 2022 to December 2022. Institutions have to bear the increase rather than pass it on to customers. Around Rs. 14 billion in revenue is expected from this move.

Basil also said the 2021 Budget proposal of Special Goods and Services Tax (Special GST) will be implemented from 2022 aimed at raising Rs. 50 billion.

Sin taxes also resurfaced in the Budget 2022 after a lapse of three years.

Tax on cigarettes has been increased with immediate effect, resulting in the price of a cigarette going up by Rs. 5 each and the move will rake in Rs. 8 billion in additional revenue.

The Finance Minister also proposed to increase Excise Tax with immediate effect, which will bring in Rs. 25 billion in additional revenue.

Basil presents ‘futuristic people’s Budget’