WHT (Withholding Tax)
Below, we summarize the impact of the Withholding Tax (WHT) on interest income introduced in 2018. It affects your return on Fixed Deposits and Savings Accounts from Banks and Finance Companies, and we feel the topic deserves some coverage so that you can make a more informed decision when placing your money in a Fixed Deposit through Fipbox.
The implementation of WHT (Withholding Tax) on interest income will be applicable to the interest earned through the placement of a fixed deposit, and it is, therefore, not totally tax free as many believe. The tax rate has now been set at 5%, an increase of 2.5% from before, and it will affect all interest earned through Fixed Deposit products issued by all Banks and Finance Companies.
This increase of tax to 5% is stipulated in the new income tax act, which came into effect on the 1st of April, 2018. This new income tax act will also impact senior citizens if their interest income is in excess of Rs.1.5 Million. The increase in WHT will affect the many senior citizens of Sri Lanka who place their money in fixed deposits as safe retirement options.
The financial burden resultant of the increased WHT as per the new income tax act may be mitigated if you make an informed decision and placed a high-interest earning Fixed Deposit through a reputed bank or finance company partnered with Fipbox.
How does WHT affect Senior Citizen’s Fixed Deposits in Sri Lanka?Being a country where many senior citizens save money for retirements on fixed deposit WHT withholding tax is applicable to Senior citizens too.
The new tax revision will be applicable, if the income of a senior citizen is over Rs.1.5 million, according to new income tax act.