The Department of Inland Revenue on March 28, 2025, issued two circulars following the Inland Revenue (Amendment) Act No 02 of 2025.
- The first circular, No. SEC/2025/E/03, sets out the procedure for submitting a self-declaration to banks or financial institutions for resident individuals with interest income subject to advance income tax (AIT - withholding tax) at the rate of 10%. If the assessable income for the year of assessment does not exceed the personal relief amount of Rs. 1.8 million, individuals may request relief from AIT on the interest payments.
- The second circular, No. SEC/2025/E/02, sets out explanatory notes and guidelines for banks or financial institutions to facilitate the application of AIT from payments of any amounts as interest, discounts, and income from Islamic financial transactions payable to any deposit holder. The circular is effective from April 1, 2025.
Read an April 2025 report prepared by the KPMG member firm in Sri Lanka