Department of Inland Revenue announces that the Ministry of Finance has decided to continue the SVAT system until such time the necessary legislation is in place. Therefore current SVAT system will continue to be in force as usual until further notice. However, Department of Inland Revenue has informed to the tax payers on 10th March 2017 that SVAT will be terminated with effect from 1st April, 2017.
The upper limit to pay 15% special interest on fixed deposits maintained by senior citizens in the licensed commercial banks and the licensed Specialized Banks has been increased up to Rs.1.5 million from the current limit of Rs.1 million with effect from March 01, the Finance Ministry said. On the instruction of the Minister of Finance Ravi Karunanayake, Treasury Secretary Dr. R.H.S. Samaratunga has informed the Central Bank of Sri Lanka to notify all banks amending the previous circular in this regard. The present Government, under its 100- day programme, in the Budget – 2015 for the first time introduced a 15% special interest scheme for senior citizens’ fixed deposits up to one million rupees maintained by senior citizens over the age of 60 years. Accordingly, the Government pays the difference between the 15% and the market standard interest rate offered by commercial banks. Treasury has incurred Rs 13,000 million for this purpose in 2016. As a result of this offer to senior citizens, the number of fixed deposits by senior citizens rose to 450,000 in 2016 from 91,000 in 2015, a statement said. The number of fixed deposits maintained by senior citizens is reported to have risen today to 500,000 since the Minister Ravi Karunanayake announced the continuation of the senior citizens deposits scheme which guarantees an interest of 15 percent for deposits with the increase of the upper limit up to Rs 1.5 million. Director General of Department of Development Finance said that with the increase of the upper limit, Treasury has to spend Rs.18,000 million to pay the 15% interest during this year Meanwhile, Finance Minister Ravi Karunanayake said that this Government introduced various facilities to assist senior citizens after 2015 as the ageing population is on the increase in the island. In addition to the 15% interest, which was introduced in the country for the first time in 2015, the benefit of Agrahara Insurance Scheme available for the public servants was extended up to 70 years for the benefit of those who are retiring from the public sector. In the Budget 2017 the Minister Ravi Karunanayake announced the extension of the insurance cover for the full life time of the retiring public servants from this January.
Government decides to further reduce import duty on rice with immediate effect.
The government has decided to further reduce the existing tax on imported rice with immediate effect. Accordingly, Special Commodity Levy on imported rice will be reduced to Rs.5 from Rs.15 with effect from midnight of January 27.
On the advice of His Excellency President Maithripala Sirisena and Honorable Prime Minister Ranil Wickremesinghe, Finance Minister Ravi Karunanayake has taken this decision in order to provide urgent relief to the people.
Special Commodity Levy has been reduced for imported varieties of brown raw rice, Nadu and Samba. However, the tax relief is not applied to Basmati varieties.
The government took this decision in response to the exploitation of consumers by certain unscrupulous traders who hoarded stocks and made fast money in the recent past.
Budget 2017 – Sri Lanka
Finance Minister Mr. Ravi Karunanayake will present the third budget of the National Unity Government of President Maithripala Sirisena and the Prime Minister Ranil Wickremesinghe on Thursday at 2.00 pm in the Parliament. This will be the 70th Budget of independent Sri Lanka. Mr. Karunanayake will unveil it as a full time Finance minister after Mr Ronnei de Mel did it under then J.R. Jayewardene government through 1988.
The Minister of Finance said that 2017 Budget will be a pro-growth budget which will focus on the deficiencies for the last several years. Accordingly the budget would have proposals to rectify all the anomalies that are there to deal with export sector to create job.
“It will be a real over view and over look of all the sectors of the economy that is beneficial to the people in the short run and long run,” summarized the minister about his budget secrets.
The minister said that the economy inherited was not an easy for any Finance Minister to manage due to over Rs 9.9 trillion public debt besides Rs 1.2 TRILLION debt off the balance sheet. However, with strict financial discipline, the government was able to pay attention on the financial consolidation and reducing the budget deficit.
Minister Karunanayake said that the government targets a fiscal deficit of 3.5 percent of GDP by 2020 where it has planned to reduce it to 4.7 percent next year from a targeted 5.4 Percent in 2016
The value of the GDP has increased to Rs 11,183 Billion (US$ 82.3 B) in 2015 from Rs.6,414 Billion (US$ 56.7B) in 2010. Sri Lanka has a new phenomenon in its expenditure chain where a sizeable portion goes to social welfare and subsidies. The next year’s budget will allocate around Rs 380 billion on welfare and subsidies.
Once the Budget is presented in the Parliament on Thursday the debate on the second reading and the committee stage will continue till 10 December including Saturday
Revision of VAT Rate The VAT rate on supply of Goods or Services including the supply of Financial Services has been revised. From 02.05.2016 to 11.07.2016 rate is 15%, from 12.07.2016 to 31.10.2016 rate is 11% and for any period from 01.11.2016 15%. the liable limit for registration of VAT by a person carries on any taxable activity other than wholesale or retail trade but including Financial Services is reduced to Rs. 3 million for a taxable period of three months or 12 million in the twelve months period. The requirement for the registration by any person or partnership shall arise with effect from May 02, 2016 where the value of supply of them exceeds Rs. 3 Mn for the taxable period commenced on or after April 01, 2016. Liable threshold for VAT registration for wholesale and retail trade for any consecutive period of 3 months in a calendar year is reduced from Rs.100 million to Rs. 12.5 million with effect from November 01, 2016.
NBT rate should be continued at 2 %. The present threshold of exempt turnover other than the turnover of any locally procured agricultural produce in the preparation for sale, is reduced to Rs. 3 Mn from the quarter commencing on or after April 1, 2016 . Accordingly, any person or partnership is liable for NBT, if the turnover from any business (other than the turnover of any locally procured agricultural produce in the preparation for sale) including the turnover of following businesses, exceeds Rs. 3 million for any quarter: – Operating a hotel, guest house, restaurant or other similar business; – Providing educational services locally ; – Supply of labour. The exempt threshold of turnover of any locally procured agricultural produce in the preparation for sale will remain at Rs. 25 Mn for a quarter.