On your calculators!

September-month where every employee who has a chargeable income needs to fill his/her income tax form and return it filled by the 30th. For the year under assessment, there have been some changes to the presentation and the content of the form itself.

Following the budget speech last year, the section where you can claim reliefs for pensions, insurance, fees for children attending universities or even medical expenses is no longer available. Instead you can claim only deduction for self, or dependents up to a maximum of 3. Dependents should either be your wife or husband or children. So a handicapped relative under which s/he is under your care does not fall under the definition of dependent and is not allowable.

The most important changes are the interest and the National residential property tax sections. The latter has gone through some passionate debates since its introduction under the budget speech. Interest acquired during the year through deposits or savings in financial institutions should henceforth be declared under this heading. Statement of income tax deduction from financial institutions should be annexed when the return is submitted. It is not in the interest of tax payers to conceal this issue as the MRA will already be in the possession of such information.  So interest on savings earned by minors should be declared by a parent as this form part of the parent’s  income. The interest issue has also raised debates on the sacrifices of parents to make savings and the justification of taxing this effort is being questioned.

With regards to the NRPT, residential properties are subject to a tax rate of rs 10 per square metre. Other properties are taxed at rs 30. Tax paid under the local government  act can be claimed back.

The government knows how to bese casse. So in the end, every individual who have a chargeable income in excess of his/her income exemption threshold will be paying tax on interest. Couples who have income in excess of rs 385,000 should be paying the NRPT. The heads of the MRA department did not unknowingly said that there will be a minimum of tax refund for the year under assessment.

As a final word, on your calculators, and seek advice for a better tax planning.

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