7. Amendment of section 25C of the principal enactment

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

Section 25C of the principal enactment is hereby amended as follows: -

(1)

in subsection (1) of that section, by the repeal of the words from “Emoluments paid to all the employees” up to the words and figures “the

Inland Revenue Act, No. 10 of 2006; and” and the substitution therefor of the following: -

“Emoluments payable to all the employees shall include -

(a)

(i) for any taxable period prior to April 1, 2018, in the case of specified employees under Chapter XIV of the Inland Revenue Act, No. 10

of 2006, the gross remuneration payable to such employees,

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as reflected in the pay sheet maintained under section 119 of that Act; and

(ii)

for any taxable period commencing on or after April 1, 2018, any gains and profits which are required to be included under subsection (2)

of section 5 of the Inland Revenue

Act, No. 24 of 2017 but excluding the gains and profits specified in paragraph (b) of subsection (3) of section 5 of the said Act:

Provided that, where any registered specified institution or other person has furnished a return under section 25B for any taxable period ending prior to January 1, 2026, in compliance with item (i) of this subsection, such return shall be treated as having been furnished in compliance with this subsection.

For the purpose of this subsection the gain and profit shall be the fair market value.”.

(2)

in subsection (3) of that section –

(a)

by the substitution in paragraph (g) of that subsection, for the words and figures “on or after January 1, 2022, shall be eighteen per centum,” of the words and figures “on or after January 1, 2022 but ending on or before June 30, 2026, shall be eighteen per centum;”;

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(b)

by the addition immediately after paragraph (g) of that subsection of the following: -

“(h) commencing on or after July 1,

2026, shall be twenty point five

(20.5) per centum.”;

(3)

in subsection (5) of that section –

(a)

by the repeal of paragraph (e) of that subsection and the substitution therefor of the following:-

“(e) the profit or income on interest arising or accrued to any approved provident fund including the Employees Trust

Fund or a Pension Fund or any thrift, savings or building society or welfare fund to which contributions are made by employees only or any approved gratuity fund, or the interest income (not being profits from a business) arising or accruing to any person other than a

“specified institution” within the meaning of this Chapter or a person not registered with the

Central Bank of Sri Lanka, but providing services similar to the services provided by a finance company;”; and

(b)

in paragraph (f) of that subsection, by the substitution for the words “services provided by a finance company;” of the following: -

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“services provided by a finance company.

For the avoidance of doubt, it is stated that the dividend income received by a person, who is not a specified institution or whose business income is not earned by supplying any services specified in paragraph (a), (b), (c), (d), (g) or (h) of section 25F, shall not be treated as profit from business;”.

Read on from s 8