Tax experts yesterday urged the government to provide further clarification on the increase in withholding tax (WHT) from 5 percent to 10 percent.

The move includes a provision for the Inland Revenue Department (IRD) to issue non-deduction instructions on a case-by-case basis, and the expert argued that clear communication is essential to ensure fairness and reduce confusion on how exemptions are handled.

“Income tax policies should provide clear solutions and announcements. “Even if a self-declaration system is introduced, imagine the time wasted and the anxiety it will create for taxpayers,” said Gajendran, senior partner at N.R. Gajma & Company, while addressing a virtual CMA Sri Lanka Tax Forum held yesterday.

He stressed that with the rising cost of living, it is difficult for people to invest or save to pay this tax.

According to Gajendran, a low-skilled worker in Sri Lanka now needs to earn at least Rs. 100,000 to Rs. 150,000 per month to cover basic living expenses.

This situation also applies to high-income taxpayers, who now have to set aside a large portion of their income, which has eroded the country’s savings and investments as a whole.

Therefore, the government should really introduce incentives like tax credits or tax exemptions for long-term savings that encourage savings, Gajendran said.

“We need structural reforms to provide tax relief to those who save or invest. Investment is very important for GDP growth,” Gajendran said.

Athula Ranweera, Managing Partner of Ranaweera Associates, reiterated his position, saying that the way the government implements this should be simplified to avoid various manipulations.

“The best thing is to go for a self-declaration system for institutional depositors. We should encourage the Inland Revenue Department to introduce a simplified system and a tax reduction system,” said Mr. Ranweera.