Senior citizens’ dilemma

It is obvious that the majority of senior citizens too are in dire straits, since the withdrawal of their special interest rate of 15% per annum on FDs, sans any withholding tax (WHT) or advanced income tax (AIT) imposed.

Currently not only the interest rates on FDs have come down drastically, ranging from 8% to 9% per annum but also all citizens are forced to pay an additional tax of 5% as WHT or AIT on all interest income earned monthly or yearly through one’s FDs and saving accounts - a double whammy indeed! Worse still is the cumbersome and time-consuming refund process that was introduced by the IRD in September 2023 which has only frustrated and disappointed the effected citizens further. 

Simply put, the IRD utilizes the AIT/WHT collection to supplement their fiscal revenue and requests us to apply for refunds, quarterly and worst, pay less mostly - that too when they want!! 

During the budget speech of President AKD, a timely proposal was made to increase the interest rate of all senior citizens (over 60yrs) by 3% over the prevailing rates on FDs with a cap of Rs. One Million per individual deposit for one year, effective from July 2025.Very unfortunately, as if to dilute this increase, a proposal has also been made to raise the on-going WHT/AIT of 5% to 10% on all FD and savings interest! 

However, the President also did mention that a system would be implemented soon to identify and ensure that all eligible senior citizens - below the taxable threshold - will not be liable for any WHT/AIT, in future. 

Hope that this will be done sooner and definitely before the proposed WHT increase of 10% comes into play!
M.R.Pathirage, 

Kolonnawa