The Cabinet of Ministers has approved a proposal to amend the Inland Revenue Act No. 24 of 2017, making it mandatory to provide a Tax Identification Number (TIN) when opening any type of bank account.
Legal provisions to increase the withholding tax rate from 5% to 10% were introduced under the Inland Revenue (Amendment) Act No. 2 of 2025, effective from 1 April 2025. However, this has led to issues, as even individuals earning below the tax-free threshold of Rs. 1.8 million per annum have been subject to advance income tax deductions, causing inconvenience to depositors and low-income earners.
To address this, the government has proposed a mechanism allowing individuals with annual incomes below Rs. 1.8 million to submit a self-declaration in order to be exempt from withholding tax on interest.
Accordingly, the Cabinet approved the proposal presented by the President, in his capacity as the Minister of Finance, Policy Planning and Economic Development, to amend the Inland Revenue Act No. 24 of 2017. The amendments will enable the self-declaration system for eligible domestic depositors and mandate the submission of a TIN for opening all bank accounts.
