Dialog FinanceSpecial Notes

Special Notes

Advanced Income Tax (Withholding Tax) Rate change from 5% to 10% W.E.F 01.04.2025 and Self-Declaration for AIT Relief on Interest Income

Based on the Inland Revenue (Amendment) Act, No. 2 of 2025 certified by the Speaker on 20 March 2025, below changes will be effective from 1 April 2025.

• AIT (WHT) of 10% will be charged on interest payments applicable for all deposit holders, except for:
  • Interest paid to foreign currency accounts.
  • Interest paid to individuals who have obtained approval from the Department of Inland Revenue (IRD) to claim an exemption or a reduced rate for AIT on deposit
    interest and have advised the Bank/ Financial Institution to act based on such approval issued by the IRD
  • Amounts derived by:
    1. The government of a foreign country or territory, as specified under diplomatic immunity laws or similar laws.
    2. An international organization, as specified under diplomatic immunity laws, similar laws, or an agreement with the Sri Lankan government;

    (provided that the exemption under the agreement is broader than that under diplomatic immunities law or a similar law.)

• If you are a Sri Lankan resident and your assessable income (from all sources) does not exceed Rs. 1,800,000, you may be eligible for relief from AIT on your interest income by submitting a self-declaration to your bank or financial institution.

Who is Eligible to Submit a Self-Declaration?

• You must be a Sri Lankan resident as per the Inland Revenue Act.
• You must earn interest income from Sri Lankan banks or financial institutions.
• Your total assessable income (from all sources, including salary, business income, and investments)should not exceed Rs. 1,800,000 for the relevant year of assessment.

What is Assessable Income?

Assessable income includes:

• Salary or wages from your job
• Business or professional income
• Investment income, such as interest or dividends
• Any other income subject to tax under Sri Lankan law.

How to Submit the Self-Declaration?

• Download the form from the Inland Revenue Department’s website (https://www.ird.gov.lk/en/Downloads/Forms_WHT_AIT/ISD_WHT_01-E.pdf).

1. Handover in person:
   Fill out the form accurately and submit it to:
   Head Office, 1st Floor, No. 57, Srimath Anagarika Dharmapala Mawatha, Colombo 03
   (working days 09:00 am – 03:00 pm).
2. Registered Post:
   Addressed to Manager – Operations at the above address.

• If you have accounts with multiple banks or financial institutions, submit a separate declaration to each.

Important Notes:

• TIN Requirement: If you are already registered for a Taxpayer Identification Number (TIN), include it on the form.
• If the TIN is not available with you, Bank/ Financial institutions will submit relevant information to IRD to obtain the TIN on behalf of you.
• The self-declaration is valid for one year of assessment only (April 1st to March 31st of the following year). You must submit a new declaration each year.
• If AIT has already been deducted from your interest income before submitting the self-declaration, the bank/ financial institution cannot refund the deducted amount. You must apply for a refund directly from the Inland Revenue Department.
• If you open a new deposit account, your previous declaration becomes invalid, and you will need to submit a new one.

Can a Guardian Submit for a Minor?

• Yes! If you’re a guardian for a minor, you can submit the declaration on their behalf but be sure to include the guardian’s NIC and TIN.

Additional Information:

• Joint Account Holders: Each must submit a separate declaration for their share of the interest income.
• If the information in your declaration is found to be incorrect, your declaration will be considered invalid, and AIT will be deducted. Inaccurate information may also lead to penalties under the Inland Revenue Act.

Upon receiving a valid declaration as outlined in the IRD circular “SEC/2025/E/03” dated 28.03.2025, the Bank/ financial institution will not deduct any taxes from interest
payments to those individuals.

Need Assistance?

• Make sure to submit your self-declaration before the deadline to avoid AIT deductions on your interest income.
• If you need help filling out the form or have any questions, feel free to reach out to your nearest Inland Revenue Regional Office or call the Inland Revenue Call Centre 1944. If not, please contact the Dialog Finance PLC hotline 0114 317 317.