Summary of Inland Revenue (Amendment) Act ,No. 02 of 2025
Inland Revenue (Amendment) Act, No. 2 of 2025 - Key Changes
Effective Date:
Starts from April 1, 2025.
1. Refunds of Overpaid Taxes (Section 150)
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Refund Limits:
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Before April 1, 2025: Up to Rs. 60,000 per year or Rs. 15,000 per quarter.
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After April 1, 2025: Increased to Rs. 180,000 per year or Rs. 45,000 per quarter.
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Time Limits for Claiming Refunds:
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For assessment years before April 1, 2024: File refund claims within 4 years from the end of the assessment year if you file a tax return
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For assessment years after April 1, 2024:
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File refund claims within 30 months from the end of the assessment year if you file a tax return.
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If the refund is initiated by the Commissioner-General, the time period they specify must be followed.
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2. Tax-Free Threshold for Individuals
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From April 1, 2025: Up to Rs. 1,800,000 annually will be tax-free.
3. New Income Tax Rates for Individuals (From April 1, 2025)
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Income up to Rs. 1,000,000: 6%
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Rs. 1,000,001 to Rs. 1,500,000: 18%
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Rs. 1,500,001 to Rs. 2,000,000: 24%
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Rs. 2,000,001 to Rs. 2,500,000: 30%
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Over Rs. 2,500,000: 36%
4 . Business Income Tax Rates (From April 1, 2025)
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For businesses involved in betting, gaming, liquor, and tobacco: 45%
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Foreign income and services utilized outside Sri Lanka (received in foreign currency and sent through banks): 15%
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Other business incomes are taxed based on the standard tax rates for individuals and entities.
5. Tax on Interest and Discounts
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Before April 1, 2025: 5%
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From April 1, 2025: 10%
6. Language Priority
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If there's a disagreement between the Sinhala and Tamil versions of the Act, the Sinhala version will be considered correct.
In Short:
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Higher tax rates for individuals and certain business sectors.
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Increased refund limits but stricter claim deadlines.
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Special tax rates for foreign income.
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Tax-free threshold increased to Rs. 1.8 million.
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Clear focus on increasing compliance and tax revenue.
