ISSN: 1391 - 0531
Sunday, December 03, 2006
Vol. 41 - No 27
Financial Times  

Confusion on interest on WHT - letter

Senior citizens are grateful for the amendment of the threshold of liability of With Holding Tax (WHT) on interest earned by them on their savings. If any depositor declares that his/her total income is less than Rs 300,000, no WHT deductions will be made. This is good news indeed for senior citizens who depend on their interest income for sustenance and medicines.

Most pensioners have deposited money in the joint names of husband and wife, so that it is convenient to withdraw money after the demise of one partner without any legal hassle.

If Mr Perera and Mrs Perera have a joint fixed deposit which earns an income from interest amounting to Rs 400,000, then what is the position? Are they liable for WHT?

Here two depositors have jointly deposited money in one account. If they deposited in individual names in two separate accounts, each will receive an interest of Rs 200,000 which is not liable for WHT. If the authorities say that the limit is Rs 300,000 for joint account holders also, they could split the deposit in individual names leave the other party as a nominee to receive the money in case of the death of the depositor.

Banks and other institutions will have their own way of interpreting the new confusing rule. In view of this chaotic situation, the Inland Revenue Commissioner-General should clarify the position:

(1) Whether joint depositors are entitled to a limit of Rs 600,000 (300,000 for each)?

(2) Whether declaration to be made on total income interest of Rs 300,000 refers to the interest earned in that bank/institution or in all banks + financial institutions in Sri Lanka?

Over to you Mr IRC!

Ariyasumithra Wijeyaratne
Secretary
Senior Citizens Forum - Piliyandala

 
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