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Notice on changes introduced to Advance Income Tax (AIT) deductions from Interest payments to both residents and non-residents of Sri Lanka with effect from 01 January 2023

A mandatory Advance Income Tax (AIT) of 5% will be charged on interest payments to all deposit holders, except for;

  • Interest paid to Foreign currency accounts;
  • Interest paid to Special Deposit accounts (SDAs) opened and maintained on or after 08 April 2020 (excluding the subsequently renewed accounts);
  • Interest derived by any government of a foreign country to the extend provided under a diplomatic immunities law or a similar law; and
  • Interest derived by an international organization to the extent provided under a diplomatic immunities law / a similar law or an agreement with the Government of Sri Lanka.

Other persons or institutes whose interest is exempted from income tax as per provision of Inland Revenue Act (as amended) shall obtain a confirmation letter from Commissioner General of Inland Revenue (CGIR) and produce to the Bank to claim such exemption. On behalf of the CGIR, relevant confirmation will be issued by the Commissioner of Customer Supporting and Promotion Unit (2nd Floor, Inland Revenue Department, Sir Chittampalam A Garnier Mawatha, Colombo 02; Phone: 0112134250; E-mail: csp@ird.gov.lk)

Upon receipt of such confirmation letter, the Bank shall exempt such interest from AIT.

Lower rate applicability on non-resident persons

Where any non-resident person or institute believes the applicable AIT rate is below 5%, due to a prevailing Double Taxation Agreement (DTA) between the government of Sri Lanka and the respective resident state, such persons or institutes should obtain a tax clearance certificate from the Inland Revenue Department (IRD) to this effect and provide the clearance certificate to the Bank. On behalf of the CGIR, relevant tax clearance certificate will be issued by the Commissioner of the Business Consultation Unit (1st Floor, Inland Revenue Department, Sir Chittampalam A Garnier Mawatha, Colombo 02; Phone: 0112134204; E-mail: bc@ird.gov.lk)

Upon receipt of such certificate, the Bank shall apply such lower rate for AIT deduction.

Instructions issued by IRD to this effect can be found in this link for your reference.

The Bank will be enacting these changes with effect from 01 January 2023.

Notice of revision to Unauthorized Overdraft Rate ("UOD") – Commercial Banking

From 14 August 2023 (inclusive of this date), we will be reducing our LKR Unauthorized Overdraft Rate ("UOD") to 24%.

All other features, as well as the terms and conditions relating to your Overdraft, will remain unchanged.