Budget 2021: Online-managed Special Goods and Service Tax introduced
November 17, 2020 07:29 pm
An online-managed single Special Goods and Service Tax has been proposed through Budget 2021 to improve the efficiency of tax collection.
This will replace various goods and service taxes and levies, imposed under multiple laws and institutions on alcohol, cigarettes, Telecommunication, betting and gaming, and vehicles, which accounts for 50 percent of the income from taxes and levies.
Budget 2021 calls for a consistent tax policy for the next five years, Prime Minister Mahinda Rajapaksa said.
It also proposes to maintain the VAT unchanged at 8 percent, for businesses with a turnover of more than Rs. 25 million per month engaged in the import and manufacture of goods or provision of services, except in the case of banking, financial, and insurance sectors.
The Prime Minister also proposed for outstanding dues on the taxes such as the Economic Service Charge and the Nation Building Tax administered by the Inland Revenue Department are proposed to be settled through a mechanism which includes a concessionary payment plan based on the payment capacity leading to a full and final settlement resulting in the closure of those files.
In addition, Personal Income Tax will apply on earnings from employment, rent, interest, dividends, or any other source only if it exceeds Rs.250, 000 per month. Withholding tax on rent, interest, or dividends and the PAYE tax (Pay As You Earn) and taxes on interest have been abolished.
