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Government expects revised VAT to net Rs.100bn extra

29 October 2016 12:05 am - 0     - {{hitsCtrl.values.hits}}

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By Lahiru Pothmulla
The government is expecting a revenue boost of Rs. 100 billion by charging Value Added Tax (VAT) this year with the increase of VAT from 11 percent to 15 percent, Fiscal Policy Department of the Finance Ministry said yesterday.


Currently, the income collected from the 11.5 percent of VAT is estimated at Rs. 280 billion. “The amount is expected to be increased up to Rs. 380 billion not only with the VAT increase but also with the inclusion of new goods and services under the VAT net,” Department’s Director General A.K. Seneviratne told a news conference held at the Finance Ministry.


He said the threshold for the VAT liability for wholesale and retail trade sector had been lowered to Rs.12.5 million per quarter or Rs.50 million per annum. Previously, the tax was imposed only on traders with an income of Rs. 100 million per annum.
The VAT threshold for supply and manufacturing sector had been lowered to revenue of Rs.12.million per annum and Rs.3 million per quarter.


Seneviratne said as direct taxes increase, the government would be able to reduce indirect taxes providing relief to the masses.
Commenting on the VAT revenue collected since May 2, which was later halted following a Supreme Court order, he said the government had collected about Rs. 7-8 billion for that month but the amount had been sent to the consolidated fund. He said there was no need of returning the funds to the public as the amount had been legalized by Parliament.


“Because of this, the government had lost a huge income for about four months since May,” he said adding the estimated government revenue for this year is Rs. 1.6 trillion and Rs. 1.7 trillion for the year ahead. Meanwhile, the Fiscal Department said the Inland Revenue Department (IRD) was in the process of tracking businessman and manufacturers who are liable to pay VAT and Nation Building Tax (NBT) but yet evade paying the tax. Tax Policy Advisor Thanuja Perera said there were only 15,000 who pay VAT and only 23,000 who pay NBT. “These numbers clearly indicate how many people out there openly evade paying taxes. The IRD, through a computer system, is tracking such personnel,” she said.


Enumerating on the health services that are exempted from the VAT, Perera said dialysis performed on kidney patients, outpatient services, surgeries etc had been made VAT-exempt while in-house patient services and channeling services were made liable.

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See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 


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