Any capital gains on housing and property within a period of 10 years of acquiring the asset will attract a 10 per cent tax, the minister told reporters at his office.
The administration had argued that the property market has been giving huge returns in recent years thanks to the infrastructure added by the government and it was only right that the state took a slice of the capital gains on real estate.
The government had initially proposed slapping a 10 per cent tax on capital gains through equity trading, but that was dropped, the minister said.
PAYE and income tax
Under the new act which is being gazetted in line with efforts to streamline the complicated tax system, the minister said employees earning up to 100,000 rupees a month will be exempt from income tax.
However, the individual tax free income will remain at 500,000 rupees a year.
Those under the PAYE schemes will get a tax credit for 700,000 rupees above their 500,000 rupee tax free allowance for a year.
This means an employee earning a monthly salary of 100,000 (inclusive of all allowances) or an annual income of 1.2 million rupees will not have to pay tax. This concession is not available to self-employed who will have to pay taxes on their monthly income if it is more than 41,666.
Earlier a vehicle allowance of 50,000 rupees a month was exempt in addition to the 50,000 salary. But now all deductions have been limited to 700,000 a year. The highest tax rate has been raised from 15 percent to 24 percent.
The effective date of the new tax structure is not clear, but the bill is being gazetted.
(COLOMBO, May 14, 2017)