COLOMBO: A Bill has been published on 16th March 2023 to amend the Income Tax Law in Sri Lanka. The Inland Revenue Amendment Bill seeks to amend the Inland Revenue Act No.24 of 2017.
A key new law has been proposed to discourage cash transactions. As per the new provision for any payments in cash after 1st April 2023 (other than by way of account payee cheque or account payee bank draft or by the use of a credit card, debit card or electronic payment system through a bank account) aggregating more than Rs 500,000/-, the person making such cash payments other than via the banking channels will be denied the deduction in computing the taxable income of such person.
The Law further states that such payments cannot be considered as part of the cost of the Asset. The intention of this amendments seems to be to encourage transactions in a form which is facilitated via the banking channel. This provision will be effective from 1st April 2023.