WHT on FD interest - 2.5% deducted

[Future123Active Member]

I received my monthly FD interests and the amount looked lesser than the usual amounts. I called my FD guys and found out that they have started deducting 2.5% from April 2015 irrespective of the amount you receive.

It's unfair in my opinion as this was not communicated to me by the Finance companies and the banks. Since I regularly check and reconcile my FD interests I was able to spot this.

The new WHT of 2.5% on interest income is re-introduced by the government due to the present financial crisis. I came to know from reliable sources that the IRD is under pressure to collect taxes even from non tax payers (who submit returns and has Taxable income less than 500,000/=.) One of my friends was asked to pay income tax recently though his taxable income is less than 500,000/=. The assessor has asked him to do this as a favour as the treasury is in a dilemma.

I also heard that some old taxes like BTT and GST are likely to be reintroduced targeting small businesses. This was waived off years back for small businesses.

Bit worried about corporate taxes. It also likely to be increased in the next budget from present 28%. The government is struggling to pay its commitments. They have paid only 5000/= increase to the government staff and balance 5000/= due in June.
Further they have not started paying the minimum payment for rubber and paddy.
Don't know how these things are possible.

I feel the increase of 10,000/= for government staff salaries is a serious miscalculation. The government sector is unproductive and inefficient and does not contribute to the national economy significantly. They are in fact a big burden now for the treasury due to increased salaries.
Eg: I went to a post office in Colombo for some parcel collection recently and the staff are very very rude and arrogant towards customers.

I feel that middle class will be burdened with new form of taxes in the future.

[jiggysaurusTop contributor]

Defa very good idea.

Shoeshine boys who don't contribute anything to the country but sit and check and reconcile FD interest and then waste excessive time on forums should be very heavily taxed.

I feel that shoeshine boys and girls should be burdened with a new shoeshine tax and this should start at 50%.

[Future123Active Member]

Defa very good idea.

Shoeshine boys who don't contribute anything to the country but sit and check and reconcile FD interest and then waste excessive time on forums should be very heavily taxed.

I feel that shoeshine boys and girls should be burdened with a new shoeshine tax and this should start at 50%.

How can you say that I don't contribute anything to the country? I pay PAYE Tax.

I also contribute my skills to the country.

What I tried to say was when they impose new taxes they should at least make a public announcement through the media. This WHT was not in the mini budget proposal and came as a surprise.

[dhanurrox]

5000 left on salary is a lie here and how can you make predictions on taxes like this.No one can do that.Did you predict the 50bps cut by CB last week.May be your 2.5% story is correct but others here are utter nonsence

[doca]

why not this was communicated through Newspapers as i remember ,, datz gud for the people who r jst looking at FDs without any investments..

[First Guy]

Forget the media, it was discussed here.

https://forum.lankaninvestor.com/t4773-new-single-withholding-tax-of-2-5?highlight=withholding+tax

So you are getting 6.3375% instead of 6.5%

Had you been paying the 8% tax and found that it's now 2.5% would you have complained?

[balapasTop contributor]

Definitely Rs 10,000 increase was too much. In govt sector except for few no one does any work for the country or people.

2.5% on interest is no big deal actually. I hear the 15% interest on FDs might end this year for senior citizens so hurry up if someone want to put FD's on parents name.

If tax rates are increased and BTT etc will be introduced for smaller businesses etc is going to be a big slow down in businesses. Also share market will go downhill after announcing this in the budget. I hope you are wrong.