New tax benefits and reduction for bank deposits and retiring employees

Nov 16, 2006 (LBO) – Sri Lanka to halve the surcharge on individual deposits and hopes to increase the tax free threshold for retiring employees as well as remove tax on capital gains and benefits. President and Finance Minister Mahinda Rajapakse told Parliament the taxable interest level will be raised from 108,000 to 300,000 rupees and the ten percent surcharge will be reduced to five percent if total income is between 300,000 and 600,000 rupees.

If the total income is over 600,000 rupees, the ten percent surcharge will apply on the interest in excess of 300,000 rupees the Minister also said.

“As a relief for retiring employees after 20 years of service the tax free threshold for terminal benefits will be raised from two million to 5 million rupees,” he said.

The threshold for employees retiring before 20 years in service will also be raised from one million rupees to two million rupees.

The taxable level for all retiring employees will be increased to lessen the burden the Minister said.

Rajapakse also hopes to remove the tax levied on gains and employment benefits from shares owned by employees.

click to read the Budget 2007 speech: