29. Insertion of new section 122A in the principal enactment

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

The following new section is hereby inserted immediately after section 122 of the principal enactment and shall have effect as section 122A of that enactment :–

122A. (1) Every bank or financial institution shall, subject to the provisions of this Chapter, deduct at the time of payment, from the interest payable by it in any year of assessment commencing on or after April 1, 2002, on any sum of money –

(a)

deposited with it by any person or partnership in his or its own name or in

“Bank or financial institution to deduct income tax on interest paid.

Inland Revenue (Amendment)

the name of any other person or without the name of any person or partnership ;

and

(b)

the interest payable on which is not less than six thousand rupees per month or seventy two thousand rupees a year, income tax at the rate of ten per centum on the total amount of the interest earned on such deposit :

Provided however, the provisions of this section shall not apply in respect of a institution certified by the Commissioner - General, as a charitable institution on any interest which is not in excess of twelve thousand rupees per month or one hundred and forty four thousand rupees a year accruing to such institution on any deposit :

Provided further that where a person or a partnership requests in writing to a bank or financial institution to deduct income tax at the rate of ten per centum from any interest payable to such person or partnership in any year of assessment, on a sum of money deposited by such person or partnership with such bank or financial institution, then such bank or financial institution shall comply with such request notwithstanding that the interest payable on such sum of money for that year of assessment is less than seventy two thousand rupees.

(2)

For the purposes of a deduction under this section –

(a)

“interest” in relation to the deposit of a sum of money includes interest, discount or any other amount payable to, or accruing to the benefit of the person or partnership in

Inland Revenue (Amendment)

whose name, or on whose behalf the sum of money is deposited but does not include any interest exempt under section 10 or any interest payable to any Ministry,

Government Department or any local government institution or any institution under a Provincial Council or any Foreign

Government ;

(b)

in the case of a discount, interest shall be deemed to have been paid at the time such discount is allowed.

(3)

Where the Commissioner-General is satisfied that any bank or financial institution has devised a method to contravene the provisions of subsection (1) as regards the deduction of tax, the Commissioner-General may impose on such bank or financial institution a penalty of a sum equivalent to five hundred per centum of the tax avoided by the use of such method.

For the avoidance of doubt it is hereby declared that “deduct at the time of payment from the interest payable” in subsection (1) shall include any amount of interest credited to any account.”.

Read on from s 30