The draft Amendment Bill to revising the Inland Revenue Act was published in the government gazette on Tuesday (Oct. 11), proposing key changes to the income tax.
The gazette notification was issued by President Ranil Wickremesinghe in his capacity as the Minister of Finance, Economic Stabilization and National Policies to amend the Inland Revenue Act, No.24 of 2017.
According to the draft proposal, it has been decided to tax people based on different income earning criteria.
As such, the taxable sum from the income of a person within the period of 06 months from April 01, 2022 to September 30, 2022, begins with people earning an annual income exceeding Rs. 1.5 million.
Thereby, a tax will not be charged on anyone with an annual income of Rs. 1.5 million or lower. Those who earn an annual income between Rs. 1.5 million and Rs. 3 million will be subject to a tax of Rs. 90,000 and 12% of the amount in excess of Rs. 1.5 million. In addition, people with an annual income above Rs. 3 million will be required to pay a tax of Rs. 270,000 and 18% of the amount in excess of Rs. 3 million.
Meanwhile, from October 01, 2022 to March 01, 2023, it has been proposed not to impose a tax on people with an annual income not exceeding Rs. 250,000. All those with an annual income above Rs. 250,000 but not exceeding Rs. 500,000 will be required to pay a tax of Rs. 15,000 and 12% of the amount in excess of the Rs. 250,000. For those with an annual income over Rs. 500,000 and below Rs. 750,000 will be charged a tax of Rs. 45,000 and 18% of the amount in excess of Rs. 500,000. Further, people who earn more than Rs. 750,000 but do not exceed Rs. 1 million annually will be subject to a tax of Rs. 90,000 plus 24% of the amount in excess of Rs. 750,000.
The most notable feature of the draft proposal is the revision of the annual personal income tax subject to a tax-free threshold being reduced from Rs. 3 million to Rs. 1.2 million.