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New tax law exempts net income of small businesses and artistes

The Ministry of Finance in a communique clarified that the net income of small businesses and artistes up to 500,000 rupees will be exempted from taxation under the new Inland Revenue Act.

Accordingly, with the implementation of the government’s new tax act, the annual net income obtained by artists in literature, arts, music, and stage and film sectors from their productions, after deducting the costs incurred for the workers, including payrolls or other payments, will be tax free up to 500,000 rupees.

Accordingly, the artistes, who have been given special tax concessions and limits so far, will be taxed in the same manner as the common people earning taxable income.

Similarly the self-employed Individuals and small businesses will receive tax exemption up to 500,000 rupees from their annual profits, the Finance Ministry said.

Following the initial exemption of 500,000 rupees of net income, the additional annual profit up to 600,000 rupees will be taxed at a 4 percent rate. The next 600,000 rupee annual profit bracket will be taxed at 8 percent, after which, tax rate will be increased by 4 percent for every 600,000 rupees increase in net income.

The new tax system will be effective from the 1st of April 2018.

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