Personal Income Tax revised

The Government yesterday via the 2017 Budget announced revisions to the Personal Income Tax system.

Finance Minister Ravi Karunanayake said the income tax rate structure of individuals, including PAYE, is proposed to be revised and the maximum rate will be 24%. 

Earnings in excess of the tax-free threshold will be taxed at the progressive rate structure which will be 4%-24%, having equal slabs of Rs. 600,000 per annum at each level.

The PAYE rate schedule will be revised in line with personal income tax rates and all the exemptions applicable on various categories will be removed. Instead, the tax-free threshold of Rs. 100,000 per month will be available for every employee on their employment income. Income from secondary employment up to Rs. 50,000 per month will be liable for PAYE at 10% and if it is more than Rs. 50,000 the tax will be at the rate of 20%.

The PAYE of the employees of State-owned enterprises and other Government institutions should be deducted from the employees’ emoluments and should not be paid by the institution.

The Holding Tax (WHT) on interest income will be increased to 5% from the present level and the exemption applicable on the savings account with less than Rs. 60,000 per annum will be removed. WHT will be reintroduced on specified fees where the payment exceeds Rs. 50,000 per month. Interest income of senior citizens up to Rs. 1.5 million per annum, which is Rs. 125,000 per month, will be exempted from income tax.