Budget Proposals 2021 (Kreston Sri Lanka)

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Budget
Proposals
Overview
DISCLAIMER
The information contained herein is of a general nature and is not intended to address the circumstances of any
particular individual or entity. No one should act upon such information without appropriate professional advice
after a thorough examination of the particular situation.
November 18, 2020
Dear Client,
BUDGET PROPOSALS - 2021
We have pleasure in forwarding herewith
a. A Summary of the Budget Proposals presented in Parliament on

17th November 2020, by Prime Minister and Minister of Finance
Hon Mahinda Rajapaksa.
b. Recent changes announced by the Department of Inland Revenue.
If you require any further information or clarifications relating to the above,

you may contact us.
Yours faithfully,
CONTENTS
Tax Related Proposals

A. Tax Policy and Administration 6
B. Tax Concessions 7
C. Tax Exemptions 8-9
D. Miscellaneous Tax related proposals 10 - 11
E. Tax Relief Measures to facilitate post COVID -19 Economic Recovery 12
Budget Speech Summary 13 - 27
Recent changes announced by the Department of Inland Revenue

A. Employment Income - Key Changes 29 - 30
B. Other Important Changes made to taxation of individuals - 2019/2020 31 - 32
C. Changes made to Withholding Tax and introduction of Advanced Income Tax 33 - 36
D. Income Tax Rates – Key Changes 36 - 38
E. Exemptions effective from 1st January 2020, 1st April 2018 & 1st April 2019 38 - 39
F. New Relief & Qualifying Payments 40
G. Value Added Tax 40 - 41
H. Taxes Abolished 41
Tax Information at a glance 42 - 43
KRESTON SRI LANKA BUDGET PROPOSALS 2021 4

TAX RELATED
PROPOSALS
A
TAX POLICY
AND
ADMINISTRATION
• Consistent tax policy will be maintained for next 5 years.
• Introduction of an online managed single Special Goods and Services Tax (SGST) in place of various
goods and services taxes and levies imposed on alcohol, cigarettes, Telecommunication, betting and
gaming and vehicles to improve the efficiency on tax collection. These taxes account for 50% of the
income from taxes and levies.
• Tax laws will be amended to facilitate the mandatory E-filing of all companies with effect from
01 April 2021. Tax Identification Number (TIN) will be mandatory in all tax related transactions.
• Instructions to be issued to ensure the better and transparent management of the provisions for
anticipated losses of loans and doubtful loans in calculating taxes of banks and financial institutions.
• Legal provisions relating to establishment of specific time frames for the implementation of rulings and
settlement of appeals submitted under the Inland Revenue Act to be strengthened.
• Special Tax Appeal Court will be established to resolve tax appeals.
• High earning and large-scale businesses, bank, and financial institutions to be brought under one
Large Taxpayer Unit (LTPU) to operate all their taxes under direct responsibility of the Commissioner
General of Inland Revenue.
• Punitive legal provisions including being barred from practicing will be introduced against auditors
and private tax consultants who represent the tax payers to prepare and certify fraudulent tax reports.
• Capital gain tax will be calculated on sale price of a property or assessed value of a property
whichever is higher.

B
TAX
CONCESSIONS
• Concessionary payment plan to be introduced to settle the outstanding dues on Nation Building Tax
(NBT) and Economic Service Charge (ESC)
• 50% Income Tax concessions will be given for Companies which will be listing in Colombo Stock
Exchange (CSE) before 31.12.2021 and profits of such companies will be taxed at 14% for
subsequent three years.

C
TAX
EXEMPTIONS
• Profits and income earned by any person from farming including agriculture, livestock, and fisheries
are exempt with effect from 01 April 2019 for five years.
• Profits and income earned from providing IT and enabling services by resident or non-resident
persons are exempted with effect from 01 January 2020. Enabling services are to be prescribed by
regulations.
• Samurdhi Life Savings Account -SLSA will be opened for each Samurdhi beneficiary by the Samurdhi
bank and it is mandatory to invest Samurdhi savings in Government Securities. The interest income on
such investments will be exempt from all the taxes.
• Income tax on interest income of Welfare societies and institutions will be removed.
• Investments in housing made through Sri Lanka Real Estate Investment Trust (SLREIT) will be exempt
from Capital Gains Tax. Further dividends are exempt from Income Tax and also the stamp duty will
be reduced up to 0.75% on such investments.
• Tax on dividends of foreign companies (non- resident companies) will be exempted for three years,
if such dividends are utilized for reinvestments on expansion of business or invest in Money or stock
market or invest in Sri Lanka International sovereign bonds.
• Profits on capital and interest income from investments in International sovereign bonds by
Commercial banks, will be exempt from income tax, if the investment is more than USD 100Mn and
risk weighted provisioning as per Central Bank regulations will be suspended for three years.
• Investments which exceed USD 10Mn in export industries, dairy, fabric, tourism, agricultural
products, processing and Information Technology will be provided with tax concessions upto a
maximum period of 10 years under the Strategic Development Law.

• Profits and income from investments in Bonded warehouses and warehouses related to offshore
businesses in Colombo and Hambanthota Ports will be exempt from all taxes.
• With effect from 01 January 2021, 5-year tax exemption period will be made available for domestic
telecommunication industrialists building telecommunication towers and infrastructure using domestic
labour and materials.
• Tax exemption of 5 years will be given to the businesses commenced by individuals qualifed with
vocational education. The Cost of Funds of funds provided for such start-up capital, provided by
banks and finance agencies will be considered as deductible expenditure in the calculation of taxes.
• In order to encourage the private sector institutions which will be standardized under one TVET
concept, to enhance their student intake at least up to 50,000, it is proposed to give a tax holiday on
their income for a period of five years if those institutions double their intake.
• Strategic investment tax concessions will be provided for a period of 5 years for capital investments
of over USD 25 million with the view of facilitating Dairy Industry companies to process milk powder
exports instead of importing milk powder.
• To encourage the recycling and re use of material from construction, it is proposed a ten year tax
holiday for investments in selected recycling sites.
• Dividends distributed by Commercial hub Enterprises will be exempt with effect from January 1, 2020.
• All aircraft related payments, software licenses and other overseas payments made by Sri Lankan
Airlines will be exempt with effect from April 1, 2018.
• Exemption or variation of the applicability of the provisions of the Inland Revenue Act No.24 of
2017, in respect of projects approved under the Strategic Development Projects Act No.14 of 2008.
• A tax holiday of 7 years will be allowed for all renewable energy projects.
• If any commodity has been exempted from VAT at its importation point, It is proposed to exempt from
VAT, the domestic production of that particular commodity as well.
• In order to maintain a similar amount as the import expenditure in foreign exchange in domestic
banks, the interest income of such deposits will be exempted from taxes.
• It is also proposed to grant a tax break of 7 years for local boat and shipbuilding.

D
MISCELLANEOUS
TAX RELATED
PROPOSALS
• Proposed to get businesses and factories with more than 50 employees, to contribute 0.25 percent of
the turnover to the proposed insurance fund.
• Proposed to allow the deprecation in 2 years of the capital investments done on latest technology
to collect local liquid milk in collaboration with local dairy farmers, enhancements to milk related
productions and promotion of liquid milk.
• It is proposed to reduce the import taxes levied on vehicle spare parts required for new production
sectors to incentivize entrepreneurs in automobile industries engaged in vehicle repairing and vehicle
assembly.
• Certain raw materials such as cement, premix, iron rods, bitumen that cannot be produced
domestically will be imported in bulk without import duties, to be used for the construction of mega
housing schemes, highways and also to ensure the smooth and continuous availability of such
materials for small and medium construction activities at a competitive price.
• It is proposed to exempt import tax on the import of machinery with modern technologies.
• With the aim of incentivizing the strengthening of Banks and Finance Companies, it is proposed to
consider the investment expenditure in acquisitions as deductible expenditures.
• It is proposed to implement an insurance scheme through Sri Lanka Export Insurance Corporation with
the contribution of an insurance premium of 1 percent of the export revenue of small and medium
scale exporters.
• The Related expenditure of the local entrepreneurs who contribute to establish Samurdhi Women’s
shops will be allowed to deduct such expenditures in the calculation of personal income tax.

• A new legal framework conducive to promote commercial services and investment in Colombo Port
Special Economic Zone will be introduced in January 2021.
• It will provide concessions on required taxes and specific goods trade, banking and foreign exchange
with the objective of converting the Port City Economic Zone as one of the hubs for investment
promotions in the country.
• Legal provisions will be introduced to provide a tax pardon to entrepreneurs thus utilizing funds for any
investment facilitated by this budget under the payment of taxes amounting to 1 percent.
• It is proposed to reduce the expenditure on research and development expenses of local entrepreneurs
involved with the Institute of Nanotechnology from taxes.

E
TAX RELIEF MEASURES
TO FACILITATE POST
COVID - 19 ECONOMIC
RECOVERY
(i) Consideration of the income generated from the supply of Health Protective Equipment and similar
products by BOI companies on the request of Ministry of Health and Indigenous Medical Services,
Department of Health Services, Tri Forces and Sri Lanka Police as "Deemed Exports" and to
consider the said quantities for the calculation of 80% export requirement for the tax purposes, to
become eligible for reduced tax rates.
(ii) Waiver of Income tax in arrears, payable by the SMEs as defined in the Inland Revenue Act, No.
24 of 2017, on the assessments issued up to the year of assessment 2018/2019 by the CGIR,
where he is satisfied that there is no fraud or willful neglect involved in the disclosure of income or
any claim for any deduction or relief.
(iii) The income tax return furnished by the SMEs for the year of assessment 2019/2020 is proposed
to be accepted and additional assessment not to be issued for that year on tax payers, who furnish
the Income Tax Returns for the year and pay the tax declared in the Return.
(iv) A grace period is proposed to be granted to settle the taxes in arrears/default, as agreed with the
Legacy Unit, Default Tax Recovery Unit and the Revenue Administration Management Information
System (RAMIS) Unit of the Department of Inland Revenue.
(v) The payment or/and submission of the returns of any tax administered by the CGIR, which is due
for the period from March 1, 2020 to June 30, 2020, proposed to be treated as paid or/and
submitted on the due date if such payment / submission is made on or before December 31, 2020.

BUDGET SPEECH
SUMMARY
• Introduction of an online managed single Special Goods
and Services Tax (SGST) in place of various goods and
services taxes and levies imposed on alcohol, cigarettes,
Telecommunication, betting and gaming and vehicles
to improve the efficiency on tax collection. These taxes
account for 50% of the income from taxes and levies.
• Concessionary payment plan to be introduced to settle
the outstanding dues on Nation Building Tax (NBT) and
Economic Service Charge (ESC)
• Tax laws will be amended to facilitate the mandatory
E-filing of all companies with effect from 01 April 2021.
Tax Identification Number (TIN) will be mandatory in all
tax related transactions.
MICRO ECONOMIC ROAD MAP • Instructions to be issued to ensure the better and
transparent management of the provisions for anticipated
• Maintain an inclusive growth rate of 6% over the medium
losses of loans and doubtful loans in calculating taxes of
term
banks and financial institutions.
• Control the cost of living by maintaining the inflation rate
• Legal provisions relating to establishment of specific time
at around 5%
frames for the implementation of rulings and settlement
• Reduce the revenue -expenditure gap of the government
of appeals submitted under the Inland Revenue Act to be
annually from 9% to 4%.
strengthened.
• Reduce Public debt from 90% of Gross Domestic Product
• Special Tax Appeal Court will be established to resolve
(GDP) to 70% of GDP.
tax appeals.
• Personal Income Tax relief for resident or non- resident
individuals but citizens for each year of assessment is LKR
UTILIZATION OF FOREIGN LOANS 3,000,000 (LKR 250,000 per month) with effect from 01
• The planned annual utilization of foreign loans is January 2020.
approximately USD 1,400Mn
• WHT for following payments have been removed with
• It is expected to obtain bilateral development loans of effect from 01 January 2020
approximately USD 400Mn
- Interest, specified fees, dividend, charge, natural
resource payment, rent, royalty, premium or
retirement payments made to residents
- Partners share of a partnership profit
• PAYE tax has been abolished with effect from 01 January
2020.
• Profits and income earned by any person from farming
including agriculture, livestock, and fisheries are exempt
with effect from 01 April 2019 for five years.
• Profits and income earned from providing IT and
enabling services by resident or non-resident persons are
TAX POLICY exempted with effect from 01 January 2020. Enabling
• Consistent tax policy will be maintained for next 5 years. services are to be prescribed by regulations.
• Value Added Tax (VAT) rate of 8% to be continued for • High earning and large-scale businesses, bank, and
businesses with a turnover more than LKR 25Mn per financial institutions to be brought under one Large
month except for businesses in banking, financial and Taxpayer Unit (LTPU) to operate all their taxes under
insurance sectors. direct responsibility of the Commissioner General of
Inland Revenue.

• Punitive legal provisions including being barred from • 50% Income Tax concessions will be given for
practicing will be introduced against auditors and private Companies which will be listing in Colombo Stock
tax consultants who represent the tax payers to prepare Exchange (CSE) before 31.12.2021 and profits of such
and certify fraudulent tax reports. companies will be taxed at 14% for subsequent three
years.
• Capital gain tax will be calculated on sale price of a
property or assessed value of a property whichever is
higher.
• Tax on dividends of foreign companies (non- resident
companies) will be exempted for three years, if such
dividends are utilized for reinvestments on expansion of
business or invest in Money or stock market or invest in
Sri Lanka International sovereign bonds.
• Profits on capital and interest income from investments
in International sovereign bonds by Commercial banks,
will be exempt from income tax, if the investment is more
than USD 100Mn and risk weighted provisioning as per
Central Bank regulations will be suspended for three
SAVINGS AND INVESTMENT years.
• Samurdhi Life Savings Account -SLSA will be opened for • Investments which exceed USD 10Mn in export
each Samurdhi beneficiary by the Samurdhi bank and it industries, dairy, fabric, tourism, agricultural products,
is mandatory to invest Samurdhi savings in Government processing and Information Technology will be provided
Securities. The interest income on such investments will be with tax concessions upto a maximum period of 10 years
exempt from all the taxes. under the Strategic Development Law.
• New Samurdhi enterprise development loan scheme to • Profits and income from investments in Bonded
be introduced by Samurdhi Banks to facilitate the loans at warehouses and warehouses related to offshore
7% annual interest rate for Samurdhi beneficiaries. businesses in Colombo and Hambanthota Ports will be
• Income tax on interest income of Welfare societies and exempt from all taxes.
institutions will be removed.
• An expenditure relief of LKR 1.2Mn per year of
assessment can be claimed when calculating the personal
Income Tax on the following payments with effect from 01
January 2020.
- Health expenditure including contributions to medical
insurance.
- Educational expenditure incurred locally, for such
individual or on behalf of his children.
- Interest paid on housing loans
- Contributions made to an approved pension scheme
- Expenditure incurred for the purchase of equity or
security
• Non- residents could purchase super luxury
condominiums by utilizing foreign currency.
• Investments in housing made through Sri Lanka Real NATIONAL SECURITY
Estate Investment Trust (SLREIT) will be exempt from • Additional Rs. 20,000Mn will be allocated to tri-forces to
Capital Gains Tax. Further dividends are exempt from fulfil the basic requirements identified.
Income Tax and also the stamp duty will be reduced up to
• Rs. 750 Mn allocated for Ranaviru Seva Authority
0.75% on such investments.

PUBLIC SECURITY - Proposed to allocate Rs.10,000 million to develop these
Techno Parks as eco-friendly new cities connected to the
• Additional allocation of Rs.2,500Mn to strengthen the
expressway network and other infrastructure facilities.
public security.
- A new University will be established to cater to Port and
Aviation Technology Engineering subjects by 2023 in
Deniyaya in the Matara District.
TECHNOLOGICAL INFRASTRUCTURE
• A special allocation of Rs. 8,000Mn to expand the
technology sector. INVESTMENT IN PUBLIC HEALTH
- Proposed to provide an additional allocation of Rs
18,000 million for the expansion of maternity and child
CONNECT SRI LANKA clinics, dispensaries and adult service centers, laboratory
• Rs.15,000 million will be invested by Telecommunication services, hospitals and research institutes with the
Development Fund during 2021/2022 for 4G/Fibre required human resources to maintain a people centric
broadband coverage for the entire country. health service.
• With effect from 01 January 2021, 5-year tax - A new insurance scheme will be created to support those
exemption period will be made available for domestic who temporarily loose livelihoods due to the quarantine
telecommunication industrialists who will involve in the process related to epidemics including COVID.
project. - Proposed to get businesses and factories with more than
• 50% of the Telecommunication Development Levy will 50 employees, to contribute 0.25 percent of the turnover
be applied on investments in these developments in to the proposed insurance fund.
telecommunication. - This insurance scheme will be used for employees
employed at retail and wholesale shops with more than 5
employees and hotels.
TECHNO PARKS - A COVID Insurance Scheme will be implemented with the
- A techno- entrepreneur led economy will be created to assistance of the Government in parallel to the Agrahara
contribute to the increase of exports and foreign earnings Insurance Scheme for all public services.
from the technology field and broaden the knowledge
and professional services to the national economy within
the next 2 years. MANUFACTURING OF MEDICINES
- It is expected that the establishment of Technology - Proposed to provide bank and financial facilities on
centred investments and allied service industries, which Treasury guarantees to increase the production capacity
transforms into high income employment opportunities for of the State Pharmaceutical Manufacturing Corporation to
our young men and women. expand the production of essential pharmaceuticals.
- Proposed to establish 5 fully fledged plug and play - A modern investment zone will be established for
Techno Parks in Galle, Kurunegala, Anuradhapura, local and foreign private investors under the Strategic
Kandy and Batticaloa districts. Development Act.

NUTRITIONAL DEVELOPMENT OPPORTUNITIES FOR
OF INFANTS AND PREGNANT VOCATIONAL EDUCATION
MOTHERS - The island-wide network of these new technological and
- An additional allocation of Rs. 1,500 million will be technical universities will be strengthened by modernising
provided to purchase from farmers maize, soya, green the technical colleges to be attractive to the young
gram and to store the same to increase Thriposha men and women, under the “one TVET” concept within
production. a formal regulatory framework, by converting these
institutes into degree awarding entities in parallel to the
expansion of opportunities for university education.
DISTANCE EDUCATION - Action will be taken to increase the current annual intake
of 100,000 students to state-run vocational education
- The learning methodologies within schools will be
institutes up to 200,000, which requires training
formalized
instructors, provision of technical equipment and to
- The provision of internet facilities to schools will be maintain and modernize buildings.
expanded
- Proposed to provide the instructors and staff of the
- The E-Thaksalawa learning portal will be updated along vocational education institutes with incentives based on
with the strengthening of the provincial IT education their performance and to provide a monthly bursary of
centers. Rs. 4,000 for students in the vocational education system.
- To minimize the difficulties faced by students in rural and - Proposed to allocate Rs. 3,000 million as an additional
non “National Schools”, due to shortage of teachers, and financing for this purpose.
ensure the provision of continuous school education in
- Nursing schools will be upgraded to degree awarding
the face of the COVID-19 epidemic, the ‘Guru Gedara’
institutions to expand the professional education of
education channel will be made available to all students
nursing and nursing services.
by providing television sets to schools in difficult areas.
Allocation Rs.3,000 million - Proposed to provide loans of Rs.500,000 at an interest
rate of 4 percent as start-up capital to support the young
- All education institutes, education reforms including the
men and women, who start their own businesses on the
expansion of the syllabi in line with the contemporary
successful completion of vocational education. This loan
requirements, regulation of teacher education and
will have a grace period of one year for both principal
training, and examination procedures are planned to be
and interest, with a further 4 years to settle the loan.
regulated under a national education policy.

Accordingly, these entrepreneurs will be facilitated to
receive the opportunity to pay an instalment together with
interest less than Rs.12,000. In order to ascertain that
the said loans are invested on the approved business,
an annual commitment fee of 0.25 percent will be
charged for follow up and extension services. Further, tax
exemption of 5 years will be given to these businesses.
The Cost of Funds of funds provided for such start-up
capital, provided by banks and finance agencies will be
considered as deductible expenditure in the calculation of
taxes.
- In order to encourage the private sector institutions which
will be standardized under one TVET concept, to enhance
their student intake at least up to 50,000, it is proposed
to give a tax holiday on their income for a period of five
years if those institutions double their intake.
WALKING TRACKS AND
CONNECTED COMMON AMENITIES
EXPANSION OF UNIVERSITY - Planned to establish urban walking tracks and associated
common amenities in municipal and urban council areas
FACILITIES island wide in an eco-friendly manner co existing with the
- Proposed to set up a nonresident City University per bio diversity of each these areas.
District, targeting specific areas of high demand for
- Rs. 2,000 million will be allocated to develop these
employment opportunities.
facilities.
- Proposed to convert existing vocational education or
other government owned buildings and infrastructure
facilities in the Kalutara, Ampara, Puttalam and Nuwara
TOURISM INDUSTRY
Eliya districts into nonresident City Universities. Rs. 1,000
- Proposed to extend the concessions and recovery of
million will be allocated for this purpose.
loans granted under the re-financing facilities of the
Central Bank of Sri Lanka until September 30, 2021.
The Banks will be provided with a Treasury guarantee
SPORTS covering 50 percent of such loans.
- 10 sports schools will be developed with synthetic race
- Necessary amendments will be made to simplify the
tracks in order to attract the youth to sports and extra
taxes and fees levied by the Local Government Institutions
curricular activities through sports schools as well as
on tourism with an upper cap.
youth community organizations associated with cultural
centres.
- Proposed to allocate additional provisions amounting
ARCHAEOLOGICAL AND CULTURAL
to Rs. 2,000 million as the initial investment out of the
larger medium term investments to be made during 2021- HERITAGE
2024 aimed at establishing a sports complex for the - A strong legal framework for archaeological heritage
2032 Olympics, expansion of female participation, in management has been formulated.
national and international sports events and establishing - In addition to the budgetary allocations for the
a sports economy of USD 1,000 million by 2025. This rehabilitation of archeological and cultural centers, an
programme also includes establishment of synthetic additional allocation of Rs. 50 million will be made to
tracks in Kurunegala, Jaffna, Torrington, Bogambara improve the basic infrastructure required for temples in
and Diyagama sports complexes and establishment of a remote areas.
modern sports city in Sooriyawewa with information and
modern technology facilities.

- Parallel to this organic crop cultivation zones will be
developed by encouraging the use of organic fertiliser
with high quality mixed fertiliser.
- Proposed to amend the Agrarian Development Act No
46 of 2000 to empower the District Secretaries to direct
the use of barren and abandoned paddy and other
agricultural land for productive agricultural purposes.
- Proposed to uphold the policy to limit the importation of
all agricultural products which can be produced locally.
Budgetary provisions have been made available to
provide seeds, fertiliser and the expansion of extension
services in addition to the provision of a guaranteed
price to encourage cultivation of B and Red Onions,
Potatoes, dry and green chilies.
FOREIGN EMPLOYMENT
- Concession will be provided on customs duties and
- An integrated programme will be implemented with the
also support the extension of credit facilities to acquire
participation of vocational training institutes, Foreign
cold room facilities for the preservation of fruits and
Employment Bureau and foreign employment agencies
vegetables.
with the aim of directing skilled workers for foreign
- A support scheme is proposed to promote the cultivation
employment and diversifying the foreign employment
of ginger and turmeric as additional crops in coconut
market.
and rubber lands.
- A contributory pension scheme will be introduced for
workers engaged in foreign employment.
- Proposed to pay Rs. 2 per dollar above the normal LOCAL DAIRY INDUSTRY
exchange rate for the foreign exchange remittances sent
- It is planned to import dairy cattle for the development
by foreign workers to banks in Sri Lanka.
of Rideegama and Bopaththalawa farms of the National
Livestock Board as cattle breeding farms and to cultivate
nutritious pasture, maize, sorghum crops in the livestock
farms.
- Proposed to increase the government contribution to
develop small and medium scale dairy farms through
extension services which supports the dairy cattle for
breeding.
- A loan scheme will be implemented to provide special loan
facilities up to Rs. 500,000 at an interest rate of 7.5 percent
per annum for the purchase of dairy cattle, setting up of
ecofriendly cattle sheds and purchase of equipment for
small and medium scale dairy farms.
- Proposed to allow the deprecation in 2 years of the capital
investments done on latest technology to collect local liquid
milk in collaboration with local dairy farmers, enhancements
AGRICULTURE to milk related productions and promotion of liquid milk.
- A guaranteed price will be provided to encourage the
- Strategic investment tax concessions will be provided for
farmers to cultivate Rice, Maize, Kurrakkan, Sesame and
a period of 5 years for capital investments of over USD
black gram.
25 million with the view of facilitating these companies
- Fertiliser for paddy will be provided free of charge and a to process milk powder exports instead of importing milk
50 Kg bag of fertiliser for other crops would be given at powder.
a concessionary price of Rs.1,500.

- Crops such as black gram, green gram and chilli will be
cultivated during the first phase of cultivation of cashew.
Sri Lanka Cashew Corporation will provide the extension
service to promote cashew cutlivation in Mannar and
Puttalam districts amongst the small land owners.
- Relief on custom duties and financing facilities will be
provided to obtain land and modern equipment for
entrepreneurs investing in value additions to local crops
such as pepper, cloves, cardamom and coffee suitable
for the export market.
- Proposed to provide additional allocation of Rs.2,000
FISHERY ECONOMY
million for the development work to be undertaken in the
- Rs.200 million allocated for the development of Fisheries plantation sector.
Farm Zones with infrastructure facilities in line with the
environmental standards in the Districts of Batticaloa,
Jaffna, Puttlam and Mannar which are suitable for fish
production such as prawns, lobster, carp, tilapia and
REFORM OF LARGE SCALE
modha. PLANTATION COMPANIES
- Tax levied on the importation of dried fish, Maldive fish - Steps will be taken to encourage plantation companies
and canned fish will be maintained at a high level to that have become more successful and to review the
encourage domestic production. privatization agreements of unsatisfactory plantation
companies and to setup alternative investments that can
- It is proposed to provide facilities in line with green
be commercially developed.
European standards at the Kudawella, Beruwela,
Devinuwara, and Galle fishery harbors and develop - The daily wages of plantation workers will be increased
the Point Pedro, Oluvil, Gandara Fishery Harbors and to Rs.1,000/- from January 2021.
anchorages at the Kapparathota, Dodanduwa and in
Hikkaduwa.
- It is proposed to further increase the provisions for ROADS
developing facilities of fishery harbours and modern - A separate state company has been formed with the
fishing vessels and for increasing deep sea fishery vesting of expressways and related assets, to ensure
production during 2021-2023 medium budgetary frame the development and maintenance of the expressway
work. network in the country. Steps have been taken to extend
the marine drive up to Moratuwa.
- Proposed to expand the railway network in Colombo
PLANTATION and suburban areas and to expand the Kelani Valley
- Special attention has been given to use new techniques Railway up to Awissawella which will complement the
in tea cultivation, mitigate the impact of adverse weather development in the urban highway network.
and to enhance the usage of organic fertilizer. - Proposed to fast track the implementation of the 3 years
- Sugarcane cultivation will be promoted in Kantale, Road Development Programme which cover all 25
Badulla, Monaragala to enable sugarcane farmers to districts.
earn a higher income.
- Expand programmes will be implemented under
the Ministry of Plantation Industries with the aim of ELECTRICITY
establishing export, cultivation and processing zones for - It is planned to augment the capacity of the Lakvijaya
Ceylon True Cinnamon. Diversification in the plantation Coal Fired Power Plant by 300 MW and to establish
is included in the Government priority of revitalising the 2 natural gas power plants with a generation
plantations economy based on tea, coconut, rubber and capacity of 600 MW. It is also planned to convert the
cinnamon.

Kerawalapitiya power plants as natural gas power plants - Capital Grants of Rs.150,000 will be provided to
and to establish an additional natural gas power plants 10,000 small and medium scale commercial agro
with private ownership. entrepreneurs, with agricultural wells to install Solar
- Proposed to amend the Public Utilities Commission power operated water pumps.
Act and Ceylon Electricity Board Act to allow rapid - It is proposed to provide electricity either through Solar
implementation of projects. energy or rural electricity generation schemes and to
ensure the objective of “electricity for all” by the end of
2021. Rs.750 million allocated in this regard.
IRRIGATION
- Allocations are made in the 2021-2023 Medium Term
Budgetary Framework to rapidly complete the Uma
Oya Multi-purpose Irrigation Project and hydro power
plants, to enhance the irrigation facilities in Central
and North Western provinces through the expansion of
DEVELOPMENT OF RENEWABLE Moragahakanda- Kalu Ganga related irrigation system
ENERGY and Hurulu Oya irrigation Scheme.
- Renewable energy will be developed to save the foreign - Small and medium sized tanks will be rehabilitated in
exchange spent on the importation of fuel for power agricultural areas to improve the water stock to support
generation. Up to now 300 MW of solar energy is the farmers. An additional allocation of Rs.1,000 million
added to the national grid and it is expected to add allocated in this regard.
1,000 MW capacity through local investments within the
period 2021 – 2023.
- Proposed to add a capacity of 500 MW to the grid, by
providing solar panels generating 5 kW to 100,000
houses of low income families, through the loan schemes
from the Asian Development Bank and the Indian Line of
Credit, to supplement the government’s investments in the
sector.
- Loans at an interest rate of 4 percent will be provided in
this regard. This will facilitate the low income families to
save the expenditure on electricity and also earn an extra
income by supplying excess energy to the national grid.
Further, it is proposed to invest on installation of solar
panels on roof tops of religious places, public institutions,
hospitals, schools and defence establishments
- Private entrepreneurs at rural level will be facilitated WATER FOR ALL NATIONAL
to install Solar Power Plants connected to 10,000 PROGRAMME 2021-2024
transformers under the theme “Gamata Balagarayak –
- Under the “Water for All” national plan, it is planned to
Gamata Vyavasakayek.
invest Rs. 1 trillion (Rs. 1,000 billion) in 2021-2024 in
- Proposed to increase renewable energy capacity to 1,000 community water projects, 171 major projects
1,000 MW by the expeditious implementation of both aimed at enhancing the production capacity, new water
off shore wind and floating solar power plants exceeding supply schemes and expedite ongoing projects.
100 MW, with incentives provided by the Board of
- 40,000 km of pipes will be laid throughout the country to
Investment.
provide pipe-borne drinking water to an additional 3.5
- A tax holiday of 7 years will be allowed for all million families.
renewable energy projects.

• To remove import taxes on the raw materials not
available in the country, machineries and equipment
with modern technology, to boost exports, and also to
encourage domestic industries to produce value added
goods
• To classify all imports other than the above, under three
categories of 0, 10 and 15 percent.
• If any commodity has been exempted from VAT at its
importation point, it is proposed to exempt from VAT, the
domestic production of that particular commodity as well.
• In order to make import and export procedures more
efficient the officials of required regulatory bodies, will
be assigned to the Department of Import and Exports to
provide the required services.
• To ban the importation of batik products under national
sub headings in order to develop batik and related
fashions as a national industry.
• In order to develop the local garment industry as a local
FOREIGN TRADE AND THE and international garment manufacturing hub with high
quality garment and leather products demanded by
NATIONAL ECONOMY foreigners and tourists, relax the import and to implement
- Creating markets in India, China and Japan for Sri the new tariff system.
Lankan products such as Tea, apparel, rubber products,
• To develop the Rathnapura International Gem Industry
cinnamon, pepper, gems and electrical appliances.
City and enhance the gem and jewellery industry.
- Import of high technology and equipment of developed
• In order to encourage the exports of multi-national
countries as well as unique raw materials and
companies which are import based for requirements
intermediate products that cannot be manufactured
of the domestic market, it is proposed to reduce the
in the country will be allowed which could result in
tax imposed on their dividends by 25 percent in 2021
development of high value addition exports.
and 50 percent in 2023 under the condition that they
- Bilateral agreements will be formulated to expand the increase their exports by 30 percent and 50 percent in
market for exports of our country's specific agricultural the respective years.
products such as tea, cinnamon, pepper, traditional
• In order to maintain a similar amount as the import
ornaments and consumer goods, as well as toxic free
expenditure in foreign exchange in domestic banks, the
vegetables, grains and fruits.
interest income of such deposits will be exempted from
- A balanced trade policy yielding long term return will be taxes.
formulated to increase the export earnings of industrial
• Development of untapped industries such as mineral
products and to save foreign exchange through import
sand, phosphate, fertilizer and graphite as export
substitution that could be produced locally.
industries with high value. To develop the latent industries
- It is proposed to implement the following proposals. such as mineral sand, phosphate, fertilizer and graphite
• To limit importation of agricultural commodities except as high value export industries, It is proposed to reduce
the items that cannot be produced domestically (negative the expenditure on research and development expenses
List). of local entrepreneurs involved with the Institute of
• To impose the Special commodity levy to balance the Nanotechnology from taxes. It is proposed to allocate
supply and demand of domestic production for selected Rs. 2,000 million to initiate the registration of the
agricultural products Sri Lanka identity of these products.
• To impose CESS to provide the required protection on the
imports and exports of domestic production

• Provide investment incentives for rubber and coconut • Public Institutions should refrain from under estimating the
related industries, building materials and office procurement process by carrying out the immediate role
equipment and furniture as major industries. It is of providing sub contracts to the private sector.
proposed to provide incentives for investments on
household needs as well as coconut related industries
including brooms, ekel brooms, rugs and rubber related
products including agricultural and consumer needs,
building materials, office furniture, to support them as
main industries.
• Proposed to provide separate docks, dockyard access
facilities and long-term credit facilities to promote boat
and shipbuilding activities which has high development
prospects due to the rising demand in the fisheries,
tourism and shipping sectors and the high production
potential of local manufacturers. It is also proposed
to grant a tax break of 7 years for local boat and
shipbuilding.
AUTOMOBILE INDUSTRY
• It is proposed to reduce the import taxes levied on
FOREIGN ECONOMIC RELATIONS vehicle spare parts required for new production sectors
• It is proposed to restructure the Ministry of Foreign to incentivize entrepreneurs in automobile industries
Relations and Diplomatic Missions abroad to go engaged in vehicle repairing and vehicle assembly.
transcend its traditional diplomatic endeavours. • It is proposed to develop railway compartment
• Allocate Rs. 750 million to take necessary steps to production as a domestic industry.
overcome the barriers faced by our entrepreneurs in
order to utilize market opportunities presented in the
emerging Asia- Pacific region, Africa, the Middle-East CONSTRUCTION INDUSTRY
and Western countries. • Government has taken necessary action to simplify
various institutional approvals and license procedures
pertaining to the construction industry in order to make
ENGAGING PUBLIC ENTERPRISES the supply chain more efficient.
IN THE MANUFACTURING • The special presidential task force has prepared an
PROCESS estimate of raw materials for implementing projects
such as housing, roads, irrigation and water supply.
• Most enterprises except those that have a strategic
Accordingly, RDA will prepare a special programme
importance such as Sri Lankan Airlines must be
to obtain raw materials such as rock, sand, soil etc.
transformed to reduce their dependence on state banks
from identified locations, minimizing the damage to the
and treasury guarantees and thereby to reduce the
environment. All identified excavation centers will be
burden on the government.
assigned to the RDA and they will supply those materials
• It is expected that with public investment reaching over
to the construction industry without a middle-man.
Rs,1,000 billion, that state sector construction and service
• Certain raw materials such as cement, premix, iron rods,
entities will also be participating in the implementation
bitumen that cannot be produced domestically will be
of the envisaged work, which will reduce the transfers
imported in bulk without import duties, to be used to for
of both recurrent and capital nature to the public
the construction of mega housing schemes, highways
enterprises.
and also to ensure the smooth and continuous availability
• It is proposed to implement various development
of such materials for small and medium construction
programmes through public enterprises amounting to at
activities at a competitive price.
least twice as the budget provisions allocated to them.

• Vocational training institutions have planned to implement • Further, it is proposed to merge the finance companies
fast tracked training programmes facilitating the training functioning under commercial banks with the banks in
of skilled workforce to match the labor requirement of the order to strengthen the banking sector.
construction industry. • With the aim of incentivizing the strengthening of Banks
• To ensure continuous payment pertaining to the and Finance Companies, it is proposed to consider the
contractors engaged in government sector projects, investment expenditure in acquisitions as deductible
facilities will be proposed to be provided to obtain ninety expenditures.
percent of the value of the certified bills from the banks. • It is further proposed to amend the necessary laws to
• It is proposed to exempt import tax on the import of enable commercial banks to also act as investment banks
machinery with modern technologies. with the view to enhancing the diversification of the
• It is further proposed to implement a treasury guarantee finance sector.
scheme for leasing companies to obtain the leasing • It is proposed to establish National Development Banking
payments for purchase of equipment required by small Corporation – NDBC by merging Housing and Investment
and medium-term entrepreneurs. Bank, Housing Development Real Estate Limited and
• To encourage the recycling and re use of material from Regional Development Bank.
construction, it is proposed a ten year tax holiday for • In order to assist the helpless depositors of shut down
investments in selected recycling sites. companies such as ETI, the Government will facilitate
those depositors under the deposit fund held with the
Central Bank, supported by the People’s Bank.
URBAN TOWNSHIPS
• The Urban Development Authority has already
commenced construction of fully fledged housing
complexes amounting to 50,000 houses for low and
middle level income earners. It is proposed to implement
a loan scheme with an annual interest of 6.25 percent
with a payback period of 25 years to facilitate the
acquisition of those houses.
JUSTICE AND LEGAL REFORMS

• To allocate Rs. 20,000 million for a fast-tracked intensive
3 year programme aimed at increasing the number of
Justices and staff in the entire legal system including in
high courts and magistrate courts and expanding the
required infrastructure to rapidly solve pending cases.
• It is proposed to start the provision of the required
building facilities for the Supreme Court and Court of
Appeal due to the expansion of Superior Court Complex
within this year itself.
FINANCE SECTOR REFORMS • It is expected to present bills on amendment of 60 Acts
• It is recommended to completely restructure the relating to existing Commercial Law, Civil Law and
Department of Supervision of Non-Bank Financial Criminal Law to the Parliament within the first 3 months of
Institutions of the Central Bank and to formulate a robust 2021, with the contributions received from 10 specialist
organizational structure to regulate finance companies consultant teams.
• It is proposed to merge the subsidiary finance companies • It is planned to present to the Parliament required
that have not been cancelled by the Central Bank of Sri amendments to the Companies Act of 2007 considering
Lanka with the parent company. the timely needs therefor, by January next year.

PUBLIC SECTOR REFORMS MEASURES TO PROMOTE SMALL
1) A regulatory framework will be introduced to provide AND MEDIUM SCALE EXPORTS
commercial freedoms to the public enterprises in various
(TIEP SCHEME)
sectors.
1) TIEP scheme to be implemented to export high quality
2) The Finance Act will be amended to introduce a legal
goods through high value addition to local inputs by
framework to allow public sector employees of closed
providing temporary import facilities for raw materials
services to work in other institutions according to their
which are not available in Sri Lanka, spare parts,
service requirements within the existing conditions of
processing and packing materials and labels, stickers,
respective services.
catalogues and brochures to promote the products of
3) Five existing institutions related the tourism sector will direct and indirect exporters.
be reorganized under the Tourism Promotion Authority
2) It is proposed to implement an insurance scheme
and 4 existing institutions related to coconut industry will
through Sri Lanka Export Insurance Corporation with the
be reorganised as the Coconut Cultivation and Allied
contribution of an insurance premium of 1 percent of the
Industries Development Authority under an integrated
export revenue.
institutional structure
4) It is proposed to integrate the institutes related to import
of fertilizer and distribution.
ENVIRONMENT
1) The single use polythene and plastics will be banned with
effect from 01 January 2021.
“SURAKIMU GANGA” NATIONAL

ENVIRONMENT PROGRAMME
Additional Rs.200 million is provided for priority programs
CONCESSIONS FOR PUBLIC such as prevention of irregular disposal of sewage and
SERVANTS regulation of sand mining.
1) A special loan scheme will be provided for public

servants to obtain solar powered electricity.
2) It is proposed to appoint public servants by giving
FOREST CONSERVATION
preference to the districts of residence. • It is proposed to increase the forest coverage by 15,000
acres using the land available on road sdies, schools,
3) Permission will be granted for non-executive office
government and private offices.
employees of the public service to engage in other jobs
or employment after office hours and those who seek • It is proposed to strengthen the surveillance by the Sri
foreign employment to be granted leave for two years. Lanka Air Force to prevent illegal deforestation. The
identified deforested lands to be reforested with the
4) Public servants will be granted housing and property
assistance of the Sri Lanka Air Force.
loans at a interest rate not exceeding 7 percent.

CONTRIBUTORY PENSION VILLAGE ASSISTANCE
SCHEME FOR SELF-EMPLOYMENT The following village assistance proposals are submitted.
• It is proposed to introduce a contributory pension scheme 1) To provide pipe borne water connections to 450,000
for self-employed persons so that a pension will be houses – Additional allcation Rs.5,000 million in next
available to them at the end of 65 years of age. three years.
2) To construct 50,000 kilometers of rural roads – Allocation
Rs.20,000 million
COMPULSORY RETIREMENT AGE 3) To expedite the construction of 10,000 rural bridges –
• The retirement age for both men and women is increased Allocation Rs.7,000 million
upto 60 years. 4) To provide the required teachers and basic facilities to
the rural schools along with the 1,000 National School
Development Programme. – Allocation Rs.3,000 million
5) To improve rural hospitals, dispensaries, and maternal
clinics. – Allocation Rs.5,000 million
6) To develop rural school playgrounds and rural sports
societies, encourage school children to engage in sports,
improve regional sports activities, promote volleyball,
and to implement development activities to encourage
women’s participation in sports. – Allocation Rs.3,000
million.
7) To upgrade household economies of 200,000 Samurdhi
families – Allocation Rs.10,000 million.
8) To support villages engaged in traditional industries to
expand their production and to facilitate access and
attraction of markets for the special goods. – Allocation
Rs.2,000 million
9) To establish elephant fencing and trenches, and also
to construct tanks in the wildlife areas and to empower
NETWORK OF SAMURDHI the communities to engage in community safeguard
WOMEN’S SHOPS mechanisms – Allocation Rs.3,000 million.
1) It is proposed to establish a shop in all Grama Niladhari 10) To safeguard sanctuaries and elephant living areas
divisions and to promote female entrepreneurs from 11) Containers to be provided to rural agrarian, farmer and
chosen Samurdhi families. community organisations in order to store their harvest
2) The Related expenditure of the local entrepreneurs who safely in villages prone to wildlife attacks.
contribute to establish these shops will be allowed to 12) Waste management in Pradeshiya Sabhas in order to
deduct such expenditures in the calculation of personal prevent the wildlife from being attracted to villages due
income tax. to dumping of garbage in village boundaries close to
3) It is proposed to provide the contribution of Co-operative wildlife. – Allocation Rs.3,000 million.
Development Fund in order to strengthen the network of 13) To implement a credit certification scheme for
Co-operative shops. development of small and medium scale enterprises in
4) It is proposed to expand the Lanka Sathosa super market rural areas.
network to urban and semi-urban areas in collaboration 14) To maintain roads in Pradeshiya Sabha areas without
with wholesale trade using warehouses of Sathosa and adequate revenue, to maintain cleanliness in Sathipola
Food Commissioner’s Department. and common areas, disposal of wastage and provision
of community sanitary facilities. – Allocation Rs.3,000
million.

COLOMBO PORT CITY SPECIAL
ECONOMIC ZONE
• A new legal framework conducive to promote
commercial services and investment in this Special
Economic Zone will be introduced in January 2021.
• It will provide concessions on required taxes and specific
goods trade, banking and foreign exchange with the
objective of converting the Port City Economic Zone as
one of the hubs for investment promotions in the country.
GENERAL
1) Legal provisions will be introduced to provide a tax
pardon to entrepreneurs thus utilizing funds for any
investment facilitated by this budget under the payment of
taxes amounting to 1 percent.

RECENT CHANGES
ANNOUNCED BY
THE DEPARTMENT
OF INLAND
REVENUE
A) EMPLOYMENT INCOME – KEY CHANGES
1) PAYE scheme was abolished, with effect from 01 January 2020
However, on request of the employees and as a convenience to the employees the tax deduction under PAYE scheme was
permitted for the period from 01 January to 31 March 2020.
To accommodate the tax deductions for the period from January to March 2020, DIR has published cumulative tax tables and
it was required to deduct the taxes according to those tables.
2) A new tax scheme named “APIT” (Advance Personal Income Tax) has been introduced, with
effect from 01 April 2020
The APIT is introduced in lieu of PAYE tax on an optional basis for tax resident individuals who are citizens of Sri Lanka.
The employer is required to deduct APIT and remit to Department of Inland Revenue (DIR) depending on tax residency and
citizenship of the employee. Requirement to deduct APIT from regular profits from the employment is summarised in below
table:-
Status of the Employee Consent of Employee APIT Table Availability of Personal

for APIT deduction Relief LKR 3 Mn
Tax resident and citizen of Sri Lanka Required Table 01 Available

Tax resident but not a citizen of Sri Lanka Not required Table 01 / 05 Available
Tax non-resident but citizen of Sri Lanka Not required Table 01 /05 Available
Tax non-resident and not a citizen of Sri Lanka Not required Table 04 Not available
To facilitate the tax deduction on employment income under the APIT scheme DIR has published 7 tables with a guideline. (The
tables can be downloaded from the IRD web portal
http://www.ird.gov.lk/en/publications/sitepages/apit_tax_tables.aspx?menuid=1503
3) The tax free allowance (personal relief) was increased and the tax rates on personal income
slabs have been revised upwards with effect from 01 January 2020.
For last 3 months of year of assessment 2019/2020 From the year of assessment 2020/2021 onwards
Up to LKR 750,000 Personal Relief Up to LKR 3Mn Personal Relief
Next LKR 750,000 Taxed at 6% Next LKR 3Mn Taxed at 6%
Next LKR 750,000 Taxed at12% Next LKR 3Mn Taxed at 12%
Balance Taxed at18% Balance Taxed at 18%
Accordingly, with effect from 01 January 2020, tax on employment income is applicable only if the monthly remuneration
exceeds LKR 250,000 for resident individuals. (i.e: if the remuneration is more than LKR 3 Mn per annum).
• The personal relief is available only for resident individuals and non-resident individuals who are citizens of Sri Lanka.
Personal relief is not available for non-resident individuals who are non citizens. However, the progressive tax rates
ranging from 6% to 18% is applicable for non- residents as well. (i.e without the relief on first LKR 3 Mn).

4) An expenditure relief has been introduced with effect from 01 January 2020
In addition to the aforementioned personal relief an expenditure relief of LKR 1.2 Mn per year of assessment (Y/A) was
introduced and such relief consist of following;
• Health expenditure including contributions to medical insurance;
• Educational expenditure incurred locally, for such individual or on behalf of his children.
• Interest paid on housing loans
• Contributions made to an approved pension scheme
• Expenditure incurred for the purchase of equity or security
Accordingly, if a resident and citizen employee is of the view that he can claim such expenditure relief for a year of
assessment, it is advisable to avoid APIT payments and go on self - assessment tax payment basis as the expenditure relief is
not accommodated in the APIT tax tables published.
Tax free monthly Employment Income without expenditure relief - LKR 250,000
Tax free monthly Employment Income with maximum expenditure relief - LKR 350,000
5) Retirement Benefits
Retirement benefits upto 31.12.2019
First LKR 2,000,000 or 5,000,000 - exempt
Next LKR 1,000,000 - 5%
Balance - 10%

Retirement benefits from 01.01.2020
First LKR 10,000,000 - exempt
Next LKR 10,000,000 - 6%
Balance - 12%
6) Requirement to open income tax file and submit Income Tax Returns.
The deduction of taxes under the extended PAYE scheme for the period from January to March 2020 or under APIT scheme
with effect from 01 April 2020 is not considered as final tax. (i.e it is not a tax deduction at source).
Hence employees who do not have income tax files opened with the Department of Inland Revenue are required to open
Income Tax file and file Income Tax Returns by due dates.
Accordingly, the employees whose taxes were deducted under the extended PAYE scheme and APIT scheme are required to
file Income Tax Returns starting from the year of assessment 2019/2020.
Further such employees need to file Statement of Estimated Tax (SET) payable with the Department of Inland Revenue by 15th
August 2020 and Pay Instalment Payments (IP) due as per income tax payable disclosed in SET.

B) OTHER IMPORTANT CHANGES MADE TO TAXATION OF
INDIVIDUALS – 2019/2020
• Income Tax Computation for Year of Assessment 2019/2020 should be segregated into first period (1st April 2019 to
31st December 2019) and second period (1st January 2020 to 31st March 2020)
Different sources of Income of an individual, reliefs and qualifying payments should be segregated between first period and
second period as follows.
Description of Item Basis of Segregation between first & second periods

Employment Income On actual basis as per T 10 certificate
Business Income Pro rata basis - 3/4th First Period

- 1/4th Second Period
Investment Income On actual basis or pro rata basis ( ie 3/4th First Period
Interest Income (Including Interest Income of Senior Citizen) and 1/4th Second period )
Rent Income, Dividend Income and other Investment Income On actual basis
Reliefs - Personal Relief Limited to aggregate Assessable income but not available
- First Period LKR 375,000 against Capital Gains. Any un deducted Personal relief
- Second Period LKR 750,000 in a period can be ducted from other period subject to
following limitations.
* Un deducted Personal Relief relating to Second Period
should not be deducted against Employment Income of
First Period from which PAYE tax has been deducted.
* Un deducted Personal Relief is not deductible and should
be ignored when there are Final Withholding Payments
(Eg: WHT deducted Interest Income and Dividend Income)
available in the First Period and exempt amounts
available in the Second Period.
Employment Relief Un deducted Employment Relief can be deducted from
- First Period LKR 525,000 employment income of Second Period.
- Second Period - NIL
Rent Relief 25% of total rental income is available as a relief for each
period.
Senior Citizen Interest Relief Upper limit is LKR 1,500,000 subject to total interest
First Period – Upper Limit – LKR 1,500,000 income of First Period. Not available for second period.
Second Period – Not available
Foreign Service Income Relief Available to individual or a partner of a partnership.
First Period – Upper Limit – LKR 15,000,000 Upper limit is LKR 15,000,000 subject to total amount of
Second Period – Relief not available Foreign service income for First Period. Foreign service
income is exempt in the second period.

Description of Item Basis of Segregation between first & second periods
Expenditure Relief Proposed expenditure Relief upper limit is LKR 300,000/-
First Period – Not available for the second period.
Second Period – Upper limit LKR 300,000
Qualifying Payments (QP) Approved charity donations deductibility is subject to
Donation in money to approved charitable institutions 1/4th of Total Assessable Income or LKR 75000 or amount
Donation in money or otherwise to government or any donated whichever is lower
specified institution. All QP un-deducted balances cannot be carried forward
Un deducted QP brought forward under IR Act No 10 of All QP can be deducted from any period
2006
Income Tax Rates applicable for Individuals – 2019/2020
Income Tax Rates - First Period Taxable Income - First 450,000 @4%
- Next 450,000 @8%
- Next 450,000 @12%
- Next 450,000 @16%
- Next 450,000 @20%
- On balance amount @ 24%
Income Tax Rates - Second Period Taxable Income - First 750,000 @6%
- Next 750,000 @12%
- On balance @ 18%
Income tax on business income consisting of betting and 40%
gaming, manufacture and sale or import and sale of liquor or
tobacco products.

C) CHANGES MADE TO WITHHOLDING TAX AND INTRODUCTION OF
ADVANCE INCOME TAX
1) Withholding Tax
WHT should be deducted from all payments made to Non- Resident persons and some specific payments made to Resident
persons (other than exempt amounts) if such payments has a source in Sri Lanka. Refer section 73 of the Inland Revenue Act
No24 of 2017 (IR Act) for payments with a source in Sri Lanka. If a lower WHT rate is granted under Double Tax Avoidance
Agreement (DTAA) with the country of residence of Non-resident person, such lower WHT rate prevails.
Description of Payment WHT Rate Applicability Explanation
Interest and discounts paid by any person other than BFI 5% Non- Residents Payments made to persons
(NR) outside Sri Lanka is exempt
from WHT.
Dividends Nil Not Applicable Non residents – Exempt
(NA) Residents – Liable to tax at
the applicable rate
Charge 14% NR Final Withholding Payment
(FWP)
No further tax liability for
NR
Natural Resource Payment 14% NR FWP
Rent 14% NR FWP

Royalty 14% NR FWP
Premium 14% NR FWP
Retirement Payment 14% NR FWP
Other similar payments to NR 14% Residents (R) FWP
and NR
Winnings from a lottery, reward, betting or gambling. 14% Winnings from a lottery up
to Rs.500000.00 is exempt.
Once WHT is deducted
these amounts are not
liable to income tax in the
hands of the recipient as
Final Withholding Payment
(FWP).
Sale price paid to seller on a gem sold through an 2.5% R and NR Once WHT is deducted
auction remaining amount is exempt
Conducted by National Gem and Jewelry Authority. from income tax in the
hands of seller of gems.
Amount paid to NR person for land, sea, air transport 2% NR FWP
or Telecommunication services.

Procedures to be followed
1) WHT liability is computed on gross amounts excluding VAT payable to CGIR.
2) If the total invoice value is required to be remitted as a net amount to a NR person, the net amount should be grossed up by
adding relevant amount of WHT.
3) The invoice amount in foreign currency should be converted to Rupees for calculation of WHT, using selling exchange rate
published by Central Bank web site at the date of remittance.
4) Payments for joint investments should be apportioned according to the proportion of interest in investment by joint owners.
If such proportion of interest cannot be ascertained apportionment is done equally.
Amounts Exempt from Withholding Tax
Nature of exempt amount Recipient Payer
Interest income on loan granted Person outside Sri Lanka Person in Sri Lanka or
Government of Sri Lanka
(GoSL)
Pass through dividends Member of the company Resident company
WHT deducted Pass through dividends Member of the company Resident company
Dividend income Nonresident person Resident company
Dividends paid by BOI companies engaged in Following Member of the company Resident BOI company
businesses as per PART 1V of the Finance Act No 12 of
2012
• Entrepot trade (import, minor processing and export)
• Offshore business
• Providing front end services to clients abroad
• Headquarters operations of leading buyers
• Logistics services- bonded warehouse or multi-country
consolidation in Sri Lanka
Amounts specified under diplomatic immunities Law or Government of a foreign Not specified. Presumed
similar law. country or it’s agents. GoSL or any resident person
(i.e. Diplomatic Staff) Not specified. Presumed
Amounts specified under diplomatic immunities law or an International Organization or GoSL or any resident
agreement between GoSL and international organization. it’s employees. person.
(provided exemption under agreement is broader than
exemption under diplomatic immunities law. )
Amount derived for laboratory services or standard Non-resident Person Not specified. Presumed
Specification services GoSL or any resident
person.
Lottery winnings less than Rs.500,000/- Not specified. Presumed NR Not specified
and residents

2) ADVANCE INCOME TAX (AIT)
AIT can be deducted from interest, dividend, charge, natural resource payment, rent, royalty, premium, or similar payments
made to resident persons only with the consent of recipients.
AIT deduction rates.

AIT to be deducted on the amount specified by the declarant at following rates.
If the recipient is a resident individual
Amount of payment (Rs.) Tax

For Annual Declarations (Y/A) For Monthly Deductions Rate
Maximum up to LKR 3 million Maximum up to LKR 250000 6%

Up to next LKR 3 million Up to next LKR 250000 12%
Balance Balance 18%
If recipient is a person other than a resident individual
Type of person Tax rate on amount

specified by the person
Partnership 6%
On dividends to a resident company 14%
Charitable Institutions 14%
ETF, Provident Fund, Pension Fund or Terminal Fund 14%
Other resident entities including resident companies 24%
Guidelines common to both WHT and AIT

1) Time of tax deduction - At the time relevant amount is paid, credited, re- invested, accumulated, capitalized or made
available to the person.
2) Payment of tax deducted to DIR - On or before 15th of the following calendar month.
WHT on interest / AIT Tax type code 43

WHT on other payments Tax type code 44
3) Certificate of WHT/AIT deduction - Certificate shall cover one calendar month and to be served within 30 days after the
end of the month.
4) False or misleading statement - Penalty under section 181- the greater of LKR50,000.00 or the amount by which tax is
reduced due to false or misleading statement.

Record maintenance and obligations of payers / WHAs
1) Obtain a registration number (if not yet registered with DIR) not later than 30 days prior to commencement of deduction of
WHT/AIT.
2) No separate registration is required for deduction of AIT for a WHA already registered.
3) Payers / WHAs shall keep proper records (including declarations received by them – Refer annex 1(a) and 1(b) for
declaration formats) as per annex 3 and should be furnished to tax official when requested. (Refer IRD Circular No.
SEC/2020/04 dated 19th May 2020 for details)
4) Schedules to annual statements should be submitted in Excel CSV format via electronic form. Hard copies are accepted
only if the number of WHT/AIT deducted persons are less than twenty.
D) INCOME TAX RATES - KEY CHANGES

The following income tax rates have been changed with effect from 1st January 2020.
i) Income Tax Rates for Companies
Existing New
Rate Rate
a) On taxable income of a company 28% - 24%

b) On gains and profits from following specific businesses
i) Small and Medium Enterprises (as defined in Section 195) 14% - 14%
ii) Conducting a business of sale of goods or merchandise where the 28% - 14%
payment for such sale is received in foreign currency and remitted
through a Bank to Sri Lanka
iii) Specified undertaking (as defined in Section 195) 14% - 14%
Existing New
Rate Rate
b) On gains and profits from following specific businesses (Contd)

iv) Educational Services 14% - 14%
v) Promotion of Tourism 14% - 14%
vi) Construction Services 28% - 14%
vii) Agro Processing 28% - 14%
viii) Healthcare Services 28% - 14%
ix) Dividends received from a Resident Company Not liable - 14%
since WHT
@ 14% is
deducted
x) Taxable Income (other than gains from the realization of investment assets) of a trust 24% 18%
xi) Gains and profits derived by any export company which registered with the BOI 14%
Sri Lanka from consideration received in respect of health protective equipment and
similar products supplied to the Ministry of Health and indigenous medical services,
Department of Health service, Tri Forces, Sri Lanka Police and COVID Centre
xii) Taxable Income of a Unit Trust or mutual fund to which Section 59 of IR Act applies 28% 24%
xiii) Taxable Income of a Non Governmental Organisation 28% 24%

Existing New
Rate Rate
c) On gains and profits from Manufacturing 28% 18%

d) On gains and profits from conducting betting and gaming 40% 40%
e) On gains and profits from manufacture and sale or import and sale 40% 40%
of any liquor or tobacco products
f) The following Income tax rates are applicable with effect from1st January 2020 under the
Inland Revenue Act No.10 of 2006
50% deduction under Section 59I of existing company 14% 9%

50% deduction under Section 59M of existing company (Manufactures) 14% 9%
50% deduction under Section 59M of existing company (service providers) 14% 12%
Further the requirement to earn 80% or more from the specified business activity to be eligible for lower rate of income tax
(14%) is also removed effective from 1st January 2020.
ii) Income Tax Rates for Individuals (Residents, Non-residents)

a) On taxable income (in the case of non-resident individuals, on the income other than final withholding payments)
Taxable Income Tax Payable

1st - Rs. 3,000,000 6%
2nd - Rs. 3,000,000 12%
On the balance 18%
b) On terminal benefits from employment

i) Concessionary Rates
Total Terminal Benefits from Employment (Commuted Pension, Retiring Gratuity, ETF or Tax Payable
Approved Compensation)
1st - Rs. 10,000,000 0%
2nd - Rs. 10,000,000 6%
On the balance 12%
ii) Standard Rates given in above ii(a) are applicable for following type of terminal benefits.
• Compensation for loss of office which has not been approved by the Commissioner General of Inland Revenue (CGIR)
• Payment from Provident Fund (which is not a regulated fund or not an approved fund by the CGIR)
• Other payments or any retirement non-cash benefit.
c) Business consisting of betting and gaming, manufacture and sale or import and sale of any liquor or tobacco
product – 40%.

iii) Income Tax Rates for Partnerships
WHT of 8% on any partner’s share of partnership income is replaced with a tax on partnership with effect from 01.01.2020.
Applicable tax rates are given below:-
Taxable Income Tax Rate

If taxable income consist of gains on Gains on realization of investment assets. 10%
realization of investment assets. (Capital Gains)
Balance Taxable Income Not exceeding Rs.1,000,000 0%
Exceeding Rs. 1,000,000 6% on the excess of Rs.

1,000,000
E) EXEMPTIONS - EFFECTIVE FROM 01.01.2020

Nature of Exemption Exemption available for
Interest Income from foreign currency account opened in any Commercial Bank or any Any person
specialized Bank in Sri Lanka with the approval of Central Bank of Sri Lanka.
Pass through Dividends (Dividend paid out of dividends received) Member of the Company
WHT deducted pass through Dividends Member of the Company
Dividend paid by resident company to a nonresident person. Nonresident Person
Dividends paid by BOI Companies engaged in following businesses as per PART IV of the Member of the Company
Finance Act No. 12 of 2012.
• Entrepot Trade (Import, Minor processing and Export)
• Offshore Business (Goods procured or manufactured in one country and shipped to another
country without bringing into Sri Lanka)
• Providing front end services to clients abroad.
• Headquarters operations of leading buyers for management of financial supply chain and
billing operations.
• Logistics services – bonded warehouse or multi-country consolidation in Sri Lanka.
Dividends and gains on realization of shares in a nonresident company with respect to a Any Person
substantial participation.
Substantial participation means
• Holding 10% or more of the value of shares in non-resident company.
• With the direct or indirect control of 10% or more of the voting power in the company.
Amount derived for laboratory services or standard specification services Non-resident Person

Amount derived by way of grants or donations by any religious institution registered with Religious Institution
Ministry in charge of Religions Affairs.
Gains and profits from providing information technology and enabled services as may be Any Person
prescribed.
Gains and profits from any service rendered in or outside Sri Lanka to any person to be Any Person
utilized outside Sri Lanka where the payment is received in foreign currency and remitted
through a Bank to Sri Lanka.
Gains and profits from any foreign source (other than above item) where such gains and Any Person
profits earned in foreign currency and remitted through a Bank to Sri Lanka.
Exemptions - Effective from 01.04.2018
Any sum received by any Public Corporation out of the funds voted by parliament from Any Public Corporation
consolidated fund or out of any loan arranged through the government.
Interest Income on loan granted. Person outside Sri Lanka
Any income earned by any non-resident person (other than a Sri Lankan Permanent Any Non-resident Person
Establishment (PE) by way of interest, discount or realization of any gain on any sovereign
bond denominated in local or foreign currency.
Interest or discount paid or allowed on any sovereign bond denominated in foreign currency Any Person
including Sri Lanka Development Bonds.
Exemptions - Effective from 01.04.2019
Gains and profits from sale of produce of an undertaking for agro farming of such person Any Person
without subjecting such produce to any process of production or manufacture.

F) NEW RELIEFS & QUALIFYING PAYMENTS
Description of Qualifying Payment / Relief Effective Date

Any sum paid to the Consolidated Fund by a Public Corporation - QP 01.04.2019
Rs. 3,000,000/- Personal relief for residents or non-residents but citizens for a year of assessment. 01.01.2020
Expenditure relief up to Rs. 1,200,000/- for resident individual for a year of assessment for following 01.01.2020
expenses incurred.
• Health expenditure including contributions to medical insurance
• Education expenditure incurred locally, for such individual or on behalf of his children.
• Interest paid on housing loans
• Contributions made to an approved pension scheme.
• Expenditure incurred for the purchase of equity or security.
G) VALUE ADDED TAX (VAT) - ACT NO. 14 OF 2002

Recent VAT Amendments after 01.04.2019.
1. Thresh hold - w.e.f 01.01.2020 Rs. 75 Mn per quarter or Rs. 300 Mn per annum
2. VAT Rate changes
VAT Rate Category Item Description Applicable

VAT Rate
a) Zero rate Exporters / Deemed Exporters (Continuing) 0%
Tourism Sector - If conditions fulfilled *
b) Standard rate From 01.11.2016 to 30.11.2019 0%
From 01.12.2019 15%
c) Special Rates Tourism Sector from 21.05.2019-31.05.2019 5%
from 01.06.2019 - 30.11.2019 7%
From 01.12.2019 8%
Supply or import of Wood Sawn or Chipped lengthwise, Sliced or peeled, whether 5%
or not planed, sanded or en-jointed of a thickness exceeding 6mm (HS Code 4407)
01.11.2018 to 30.11.2019 5%
Supplying or import of sheets for veneering (including those obtained by slicing
laminated wood), for plywood or for similar laminated wood and other wood,
sawn lengthwise, sliced or peeled, whether or not planed, sanded, spliced or
en-jointed, of a thickness exceeding 6mm (HS Code 4408)
01.11.2018 to 30.11.2019 15%
Sale of residential accommodation by way of condominium housing units from
01.01.2019 to 30.10..2019
From 01.11.2019 to 30.11.2019 (Input VAT restricted to 5%) 6%
From 01.12.2019 Not Liable
VAT on Financial Services (Continuing) 15%

Conditions to be fulfilled
• On the supply of services by a hotel, guest house, restaurant or other similar businesses providing similar services,
registered with the Sri Lanka Tourism Development Authority, if sixty per centum (60%) of the total value of the inputs which
are sourced from local supplies / sources, VAT is applicable at the rate of zero per centum (0%).
i) “Total value of inputs” means the total value of the goods purchased during the taxable period which ended prior to the
commencement of the taxable period immediately preceding to the taxable period for which the zero percent (0%) Value
Added Tax rate applies.
ii) “Inputs which are sourced from local supplies / sources” means the total expenditure incurred for the purchase of locally
produced agricultural, horticultural, fishing, animal husbandry or dairy products and any goods manufactured locally with
minimum 10% local value addition, for the taxable period which ended prior to the commencement of the taxable period
for which the zero percent (0%) Value Added Tax rate applies”.
VAT Exemptions
- Information Technology and enabled services as may be prescribed effective from 01.01.2020. (item No.Liii).
- Exemption of the supply of services in respect of inbound tours, by a travel agent registered with the Sri Lanka Tourism
Development Authority with effect from April 1, 2020.
- Exemption of quantities suppled / donated of health protective equipment and similar products by export oriented BOI
companies to the Ministry of Health and Indigenous Medical Services, Department of Health Services, Tri Forces and Sri
Lanka Police on their request.
- Exemption of Importation or importation and supply or importation and donation of machinery and equipment including
medical, surgical and dental instruments, apparatus, accessories and parts thereof, hospital / medical furniture and drugs,
chemical and similar items required for the provision of health services to address the COVID – 19 pandemic from May
20, 2020 to December 31,2020.
Other VAT Amendments

- Reduction of piece based VAT Rate applicable on domestic sale of certain garments by the export oriented Board of Investment
(BOI) companies from Rs.100/- to Rs.25/- in line with the removal of Nation Building Tax and reduction of VAT rate.
- Removal of the provisions permitting to treat the supplies made by the suppliers who are not registered for VAT as VAT
inclusive supplies, introduced in respect of the wholesale and retail trade, in line with the increase of threshold for
registration for VAT and introduction of voluntary registration.
H) TAXES ABOLISHED
Name of Tax Effective date of removal

Economic Service Charge (ESC) January 01st 2020
Nation Building Tax (NBT) December 01st 2019
Withholding Tax (WHT) on the following payments made to resident persons removed with effect from 1st January 2020.
• PAYE Tax on employment income of resident employees
However, retaining a part of the terminal benefits in lieu of income tax by the employer/ETF/Provident Fund is required.
(A separate guideline has been published for this purpose by Circular No. SEC/2020/02 dated 18.02.2020)
• WHT on dividend, interest, discount, charge, natural resource payment, rent, royalty, premium or retirements payments
made to a resident person is removed.
• 8% WHT on Resident partner’s share of profit allocated by the partnership is removed.
• WHT @ 5% on service fee paid [referred to in section 85(1)(a)] to a resident individual is removed.
TAX INFORMATION Employment Income Advance Personal Income Tax
(APIT) is deducted monthly with
AT A GLANCE the consent of resident employees
YEAR OF ASSESSMENT (Govt. & Private Sector). Resident

Individual with income from
2020/2021 employment up to Rs.3,000,000/-
is not liable for APIT.
PERSONAL TAX
Tax Free Allowance (for Residents and Non Residents who Taxation of secondary employment income of Resident
are Citizens of Sri Lanka)) - Rs.3,000,000/- employees
Monthly Amount on which monthly Tax Rate

Remuneration tax is deductible on the on 2nd
Income Tax Rates – Residents and Non Residents
from primary total remuneration from employment
Taxable Income Tax Tax Cumulative employment secondary employment income
Rs. Rate Rs. Rs.
Upto – 250,000 “ 6%
1st – 3,000,000 6% 180,000 180,000
2nd – 3,000,000-6,000,000 12% 360,000 540,000 250,001 – 500,000 “ 12%
6,000,000 above 18%
500,001 and
“ 12%
above
Interest Income and dividend income received by a resident
Non Resident employee on the total remuneration from
individual is liable to tax at normal rates.
secondary employment – 18%

Relief for rent income from an investment asset - 25% of the
Expatriate Employees Taxed according to the Table No. 04.
total rental income.
LOSSES
Partnerships taxable income excluding capital gains is liable
With effect from 01.04.2018 losses can be fully set off against
to partnership tax @ 6%. Individual partners can claim
the income without any limitation. However lower rate losses
partnership tax against their income tax liability.
can be deducted only against exempt profit or profit liable at
lower rates.
QUALIFYING PAYMENTS
a) Donation in money to an Maximum of Rs. EMPLOYMENT BENEFITS
Approved Charity 75,000 or 1/3of Fair market value shall be taken for the Non-cash benefits. If it
Taxable Income can’t be ascertained deemed values has to be taken as follows.
whichever is less
Non Cash Benefit Value for Tax Purposes
b) Donations to Government In money or
House (rated area) Rs.240,000 per annum
otherwise full
Rs.480,000 per annum *
amount can be
claimed Telephone 50% of cost.
Motor Vehicle Benefit According to the circular issued by the IRD.
Expenditure relief upto 1,200,000 on the following:- Other Benefits Fair market value
Servants / Electricity /
- Health expenditure including medical insurance Gas / Air Ticket
- Educational expenditure incurred locally (other than official
- Interest paid on housing loans purposes / Hotel
facilities for
- Contributions to an approved pension scheme
expatiates) 100% of the cost
- Purchase of equity or security
* where employee’s salary exceeds Rs.200,000 per month

(Uniform Scheme Terminal Benefits (Gratuity, ETF) Taxation of Other Entities
Nature of Entity Tax rate on Tax

Rs. Rate Gains from rate on
First 10,000,000 Exempt realisation of remainder
Next 10,000,000 6% investment of taxable
assets income
Balance 12%
Partnerships* 10% 6%
Compensation on Voluntary Retirement Trusts 10% 18%
Unit Trusts / Mutual Funds 10% 24%
Amount received at the time of retirement from: Charitable Institutions 10% 14%
Non-government Organisations (NGOs) 10% 24%
ETF – Company Contribution – Liable
Employees Trust Fund, Approved
ETF - Interest - Exempt
Provident or Pension Funds and - 14%
EPF – Exempt
Approved Termination Funds
WITHHOLDING TAX (WHT)

Income Tax Rates for Companies Income
Tax Rate WHT on Rent (paid to Non-Resident) 14%
WHT on Other Investment returns(Royalty, 14%
On taxable income of a Company
i) 24% Charge etc.)
(Other than ii and iii below)
WHT on any Service Fees or Insurance 14%
a) Small and Medium Enterprises (SME)
ii) 14% Premium to NR Person (Subject to DTA)
(defined) WHT for NR / Conducting Land, Sea or 2%
b) A Company conducting an Agro Air Transportation or Telecommunication
14%
Processing (defined). WHT on Sale Price of any Gems sold at 2.5%
c) A Company engaged in an an auction conducted by National Gem &
undertaking for the promotion of 14% Jewellery Authority.
tourism (defined).
d) A Company engaged in CAPITAL ALLOWANCE
18%
manufacturing Class Depreciable Assets No. of
e) A Company conducting a business Years for
depreciation
of exporting goods and services 14%
including specified undertakings. 1 Computers and data handling equipment 5
together with peripheral devices.
f) A Company providing educational
14% 2 Buses and minibuses, goods vehicles; 5
services.
construction and earth moving
g) A Company with income from a equipment, heavy general purpose
business consisting of betting and or specialized trucks, trailers and
trailer – mounted containers; plant and
gaming, liquor and / or tobacco 40%
machinery used in manufacturing
(excluding such income which is
3 Railroad cars, locomotives, and equipment; 5
merely incidental to another business)
vessels, barges, tugs and similar water
Gains from realization of investment transportation equipment, aircraft,
iii) 10% specialized public utility plant, equipment,
assets (Capital Gains)
and machinery, office furniture, fixtures,
Dividend received from a resident and equipment; any depreciable asset not
iv) 14% included in another class.
company
4 Buildings, structures and similar works of 20
v) Agro farming is exempt a permanent nature.
54 Intangible Assets, excluding goodwill – Actual

Limited useful life useful life of
IA. 20
These facts are for general guidance only and professional advice should be sought prior to acting on same.


Budget Proposals 2021 (Kreston Sri Lanka)

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Budget Proposals 2021 (Kreston Sri Lanka)

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What are the main tax policy changes proposed in the budget?

What are the main tax policy changes proposed in the budget?

What are some of the tax concessions proposed?

What are some of the tax concessions proposed?

Knowing you.

BUDGET PROPOSALS - 2021

We have pleasure in forwarding herewith

a. A Summary of the Budget Proposals presented in Parliament on

b. Recent changes announced by the Department of Inland Revenue.

If you require any further information or clarifications relating to the above,

Tax Related Proposals

Budget Speech Summary 13 - 27

Recent changes announced by the Department of Inland Revenue

Tax Information at a glance 42 - 43

KRESTON SRI LANKA BUDGET PROPOSALS 2021 4

• Consistent tax policy will be maintained for next 5 years.

• Special Tax Appeal Court will be established to resolve tax appeals.

KRESTON SRI LANKA BUDGET PROPOSALS 2021 6

KRESTON SRI LANKA BUDGET PROPOSALS 2021 7

KRESTON SRI LANKA BUDGET PROPOSALS 2021 8

KRESTON SRI LANKA BUDGET PROPOSALS 2021 9

KRESTON SRI LANKA BUDGET PROPOSALS 2021 10

KRESTON SRI LANKA BUDGET PROPOSALS 2021 11

KRESTON SRI LANKA BUDGET PROPOSALS 2021 12

KRESTON SRI LANKA BUDGET PROPOSALS 2021 14

KRESTON SRI LANKA BUDGET PROPOSALS 2021 15

KRESTON SRI LANKA BUDGET PROPOSALS 2021 16

KRESTON SRI LANKA BUDGET PROPOSALS 2021 17

KRESTON SRI LANKA BUDGET PROPOSALS 2021 18

KRESTON SRI LANKA BUDGET PROPOSALS 2021 19

KRESTON SRI LANKA BUDGET PROPOSALS 2021 20

KRESTON SRI LANKA BUDGET PROPOSALS 2021 21

KRESTON SRI LANKA BUDGET PROPOSALS 2021 22

KRESTON SRI LANKA BUDGET PROPOSALS 2021 23

JUSTICE AND LEGAL REFORMS

KRESTON SRI LANKA BUDGET PROPOSALS 2021 24

“SURAKIMU GANGA” NATIONAL

1) A special loan scheme will be provided for public

KRESTON SRI LANKA BUDGET PROPOSALS 2021 25

KRESTON SRI LANKA BUDGET PROPOSALS 2021 26

KRESTON SRI LANKA BUDGET PROPOSALS 2021 27

Status of the Employee Consent of Employee APIT Table Availability of Personal

Tax resident and citizen of Sri Lanka Required Table 01 Available

KRESTON SRI LANKA BUDGET PROPOSALS 2021 29

KRESTON SRI LANKA BUDGET PROPOSALS 2021 30

Description of Item Basis of Segregation between first & second periods

Business Income Pro rata basis - 3/4th First Period

KRESTON SRI LANKA BUDGET PROPOSALS 2021 31

Income Tax Rates applicable for Individuals – 2019/2020

KRESTON SRI LANKA BUDGET PROPOSALS 2021 32

Description of Payment WHT Rate Applicability Explanation

Rent 14% NR FWP

KRESTON SRI LANKA BUDGET PROPOSALS 2021 33

Amounts Exempt from Withholding Tax

Nature of exempt amount Recipient Payer

KRESTON SRI LANKA BUDGET PROPOSALS 2021 34

AIT deduction rates.

If the recipient is a resident individual

Amount of payment (Rs.) Tax