Tax Section

Personal Taxation

 

  • Relief for medical and health insurance premium from net income, effective from 1 January 2013 as follows:
Individuals with no dependent Rs 12,000
Individuals with one dependent Rs 24,000
Individuals with 2 dependents Rs 30,000
Individuals with 3 dependents Rs 36,000
Retired person with no dependent Rs 12,000
Retired person with one dependent Rs 24,000
No relied premium paid under a combined medical and life assurance scheme
  • Increase of 50% in respect of taxable fringe benefits for cars as follows:
Year of Assessment (YOA) 2013 2014
Upto 1600cc Rs 6,000 Rs 9,000
1601 to 2000cc Rs 6,750 Rs 10,125
Above 2000cc Rs 7,500 Rs 11,250

 

  • Exemption from filing quarterly statements under the Current Payment System by self employed individuals deriving annual income of less than Rs4m
  • Exemption from income tax on interest received on debentures quoted on the stock exchange
  • Exemption of severance allowance will cover negotiated compensation under Section 24 of the Employment Rights Act as determined by the Court, effective 1 February 2009
  • Exemption from income tax of “lump sum received as commutation of pension and retiring allowance” up to a limit of Rs1.5m, effective 1 September 2012
  • Extension of tax amnesty schemes for voluntary declaration and speedy recovery of tax arrears from January to September 2013  

 

Corporate Taxation

 

  • Tax-free status for global funds which do not require relief under the double tax treaty network
  • Introduction of accelerated annual allowances in respect of expenditure made on manufacturing and “green technology” equipment during fiscal years 2013 and 2014
  • Suspension of Alternative Minimum Tax (AMT) for manufacturing companies and hotels during fiscal years 2013 and 2014 to allow impact of new accelerated annual allowance measures
  • Exemption from submission of quarterly statements under Advance Payment System (APS) for companies with an annual turnover not exceeding Rs4m
  • Extension of Tax Deduction at Source (TDS) to include services provided by laboratory technicians
  • Increase of the TDS rate on interest payable to a non-resident from 10% to 15%
  • TDS provisions applicable to public sector agencies in respect of project contracts and procurement of goods and services amended as follows
    • No TDS withheld on payment less than Rs 500
    • Application of TDS on payment of royalties
    • TDS not applicable on air travel services and where there is continuity of service (e.g telephone and postal services)
  • Extension of solidarity levy applicable to providers of telephony service for an additional year
  • Special levy on banks maintained for another two years
  • CSR contribution of up to 20% more than the statutory obligation can be spent in any given year but limited to 2 consecutive years. Any excess CSR contribution to be offset in 5 equal consecutive annual instalments against future CSR liability
  • Carry forward of up to 20% of CSR fund not yet contributed instead of remitting same to the MRA

 

Value Added Tax

Registration

  • Increase in annual turnover threshold  for compulsory VAT registration from Rs 2m to Rs 4m

 

Entertainment and Shopping

  • Refund of VAT on purchase of fittings, equipment and furniture to high street retail shops and restaurants within 7 days of claim made 
  • Revamping of the current VAT refund system  to encourage the development of shopping by visitors at the port and airport.

 

VAT refund for agro-industry and fisheries

  • Extension of the full VAT refund for agricultural and fisheries sector up to year 2013 on the following: 
    • spare parts for agricultural machinery and equipment; 
    • weed mats
    • plastic mulch
    • post-harvest equipment
    • dryers for agricultural products
    • weight scales
    • refractometer
    • industrial type chill room/cold room
    • straw and fodder bailers
    • honey extractor
    • tyres used for tractors
  • Extension of full VAT refund on equipment to producer cooperatives in agro-industry and fisheries sector

Abolition of VAT on:

  • Infant cereals not containing milk
  • Colostomy bags and urine bags
  • Entrance fees to cinemas, concert and shows
  • Royalty on importation of film

 

Other Taxes

  • Exemption of Customs duty and VAT on the first Rs 2,000 of imported goods by post and courier services  
  • Abolition of:
    • 15% customs duty on sinks, wash-basins, baths, bidets ,toilets, flushing cisterns and mechanism, and television sets of over 82 cm; and
    • 30% customs duty on sanitary towels (pads) and tampons and jute bags
  • Increase of excise duty on cigarettes and cigars by 12% 
  • Increase of excise duty on alcoholic drinks from  5 to 15%
  • Abolition of excise duty on the following:
    • motorcycles cylinder capacity from 126 to 200cc;
    • “classic or vintage” motor cars manufactured before 1970
  • Reduction of registration duty and annual road tax to Rs 1,000 each on “classic or vintage” cars
  • Reduction of excise duty on all electric cars to 25%
  • Application of 15% concessionary rate of excise duty on the first Rs 1.5m import value on a motor vehicle of a returning resident
  • Imposition of excise duty of 2 cents on soft drinks and sugar, imported or produced locally, effective as from 1 January 2013
  • Abolition of levy of Rs 1.5 charged by CWA on each litre of locally produced soft drinks and bottled water
  •  Exemption of the Land Conversion Tax on the following: 
    1. construction of buildings for technical and vocational training;
    2. setting up of manufacturing company as certified by BOI; 
    3. power stations for renewable energy; and
    4. golf courses.
  • Increase in registration duty exemption for first time buyers of built- up residential property of value from Rs 1.5m to Rs 4m.