The Ministry of Finance Economic Stabilization & National Policies today elaborated on how income tax will be levied from January 01, 2023, pursuant to the new tax amendment.

At a special media briefing in Colombo today, the Director-General of the Fiscal Policy Department of the Ministry, Kapila Senanayake pointed out that at a time the economy is at the bottom of the barrel, this is the best time to bring about reforms.

Accordingly, personal income tax will be effective from next year as mentioned below:
 
• No income tax for a person with a monthly salary of Rs. 100,000
• Income tax of Rs. 3,500 for a person with a monthly salary of Rs. 150,000
• Income tax of Rs. 10,500 for a person with a monthly salary of Rs. 200,000
• Income tax of Rs. 21,000 for a person with a monthly salary of Rs. 250,000
• Income tax of Rs. 35,000 for a person with a monthly salary of Rs. 300,000
• Income tax of Rs. 52,000 for a person with a monthly salary of Rs. 350,000
• Income tax of Rs. 70,500 for a person with a monthly salary of Rs. 400,000
• Income tax of Rs. 106,500 for a person with a monthly salary of Rs. 500,000
• Income tax of Rs. 196,500 for a person with a monthly salary of Rs. 750,000
• Income tax of Rs. 286,500 for a person with a monthly salary of Rs. 1 million

Meanwhile, Treasury Secretary Mahinda Siriwardana, who joined the media briefing, reiterated the severity of the country’s financial situation.

On average the government gets an income of Rs. 145 billion every month, but Rs. 93 billion has to be used to pay salaries, Rs. 27 billion for pension payments, Rs. 6 billion for Samurdhi allowances and another considerable sum for social welfare, he said, adding that when it is totalled with capital expenditure of Rs. 11 billion, the government incurs a cost of about Rs. 154 billion.

Siriwardana stated that, in this backdrop the government brought about reforms in a bid to increase revenue and to reduce expenditure. “What needs to be highlighted is that expenses cannot be reduced drastically just because revenue was increase as it is rigid.”

Given the crisis, the government has had to incur a large cost in order to take care of the poor and vulnerable, the Treasury Secretary continued.