Five percent reduction for those earning over Rs.50,000
Savings accounts of children too exempted from income tax

The Government has decided to significantly reduce the income tax on artistes and writers, whose monthly income is over Rs. 50,000, with the aim of providing an incentive to them.

A 10 percent income tax on artistes and writers had been imposed by the former Government if their monthly income exceeded Rs. 50,000. Finance and Mass Media Ministry Spokesman Ali Hassen said the Government has now decided to reduce it to 5 percent and charge it as ‘Withholding Tax’.

This proposal, together with several others, will be presented to Parliament by Finance and Mass Media Minister Mangala Samaraweera within this month as an Amendment Bill to the newly introduced Inland Revenue Act.

According to the proposed amendments, the royalty payments of artistes and writers upto Rs. 50,000 per month as well as all savings accounts of children will be exempted from income tax.

Hassen said the proposed amendments to the Act have already received Cabinet approval and that they have been forwarded to the Legal Draftsman and the Attorney General’s Departments.

The Gazette containing the proposals is expected to come out later this week or early next week.

 The new IR Act which came into force from April 1 was aimed at closing existing loopholes in revenue collection. It introduced a new income tax structure to up state revenue by focusing more on direct taxes while reducing the dependency on indirect taxes.

Finance and Mass Media Minister Mangala Samaraweera told Parliament last week that the number of income tax files which was 48,850 as at January has now been increased to 336,671. 

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