The Cabinet of Ministers has approved revisions to the Inland Revenue Act No. 24 of 2017 related to provisions linked to retention tax for low-income earners and the Tax Identification Number (TIN) to open bank accounts.
According to the government, legal provisions to increase the retaining tax rate from 5% to 10% were introduced by the Inland Revenue (Amendment) Act No. 2 of 2025 with effect from 01 April 2025.
It has been observed that due to charging retention tax even from individuals with an income not exceeding Rs.1.8 million, which is the annual revenue limit to recover tax from, such depositors and low-income earning individuals are facing inconvenience.
The government states that as a remedy to the issue, it is proposed to introduce a methodology to present a self-declaration by individuals with a low income below the tax-free margin.
Therefore, the Cabinet approved the proposal submitted by the President, in his capacity as the Minister of Finance, Planning and Economic Development, to introduce a self-statement for all domestic depositors with an estimated revenue not exceeding Rs. 1.8 million per annum to release them from the recovery of the retention tax on interest.
Approval has also been granted for the proposal to amend the Inland Revenue Act No. 24 of 2017, including appropriate amendments for making compulsory the submission of the Tax Identification Number (TIN) for opening all sorts of bank accounts. (Newswire)