The government’s proposed tax policy will sink the middle class economy to the lowest, says SJB MP Dr. Harsha de Silva.
Speaking to journalists at the office of the opposition leader yesterday (12), he said president Ranil Wickremesinghe had implemented the ideas of the Rajapaksas when he gazetted this tax policy on the previous night.
“It was not discussed anywhere. These are the hidden things. The agreements signed with the IMF have not been presented at least to the finance committee. That is compulsory before debating in parliament. Let’s see how it will be discussed at the finance committee.”
The draft amendment bill to revise the Inland Revenue Act proposes key changes to the income tax regime.
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.
The income tax payable by a person for the year of assessment commencing from April 01, 2022, is calculated separately for two periods of the year of assessment as the first six months and the second six months.
The taxable sum from the income of a person for the first six 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 from anyone with an annual income of Rs. 1.5 million or lower.
Those who earn an annual income of 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.
For the second six months from October 01, 2022, to March 31, 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 Rs. 250,000.
Those with an annual income of 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.
For people with an annual income of over Rs. 1 million but not exceeding Rs. 1.25 million, a tax of Rs. 150,000 and 30% of the amount in excess of Rs. 1 million will be charged.
If the annual income exceeds Rs. 1.25 million, the tax payable will be Rs. 225,000 plus 36% of the amount in excess of Rs. 1.25 million.