How government is planning to discourage cash transactions.(20.03.2023)
The Inland Revenue (Amendment)Bill was released on March 16, 2022, which includes changes to taxes that were proposed in the 2023 Budget. One of the major change in the bill is reducing the use of cash in transactions. This means the government wants people to use digital payments more and avoid paying with cash. The goal is to make things more transparent and prevent financial crimes like money laundering. The new law will affect businesses and individuals, so everyone needs to be aware of the changes and follow the new rules.
As per the provisions, commencing from April 1, 2023, If a person makes a payment of Rs. 500,000 or more in a day or for a single transaction or a series of transactions related to one event, and the payment is not made through an account payee cheque or account payee bank draft or by using a credit card, debit card or electronic payment system through a bank account, then the person making the payment will not be allowed to deduct the payment from their income for tax purposes. Additionally, the payment amount will not be considered as a cost of any asset for the person making the payment.
However above provision shall not apply to
- any payment by the Government of Sri Lanka or any Government institution;
- any payment by a bank or financial institution; and
- such classes of persons or payments as may be prescribed by the Minister.
- To promote digital payments and reduce the use of cash in the economy.
- To enhance transparency in transactions and improve tax compliance.(This may cause to open many new tax files)
- To combat money laundering and other financial crimes by reducing the use of cash.
- To encourage the development of a robust financial system and promote economic growth.
Read the full bill : Inland Revenue (Amendment) Bill -16.03.2023
Watch the video below to get an idea about the key areas of focus in the 2023 Budget proposals.
