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Amended VAT, NBT come into effect from today

The Value Added Tax (VAT) (NBT)
The Value Added Tax (VAT) and the Nation Building Tax (NBT) which were passed in Parliament on October 26, 2016 will be implemented with effect from today (November 1).

Accordingly, the previous 11% VAT has been increased up to 15%. The threshold for registration for VAT on whole sale and retail trade is 12.5 million per quarter. It is Rs.50 million per year.

The VAT registration threshold for other supplies is Rs.3 million per quarter. It is Rs.12 million per year. VAT has been imposed on cigarettes, liquor, telephone services, electrical equipment, perfumes, jewelry and imported powdered milk. However, the prices of imported or locally manufactured powdered milk would not be increased due to the amended Value Added Tax.

However, VAT has been imposed on consultation fees of doctors and medical specialists (including channel services) and hospital room charges.However, VAT will not be applied to surgeries/diagnosis, medical tests, dialysis and outdoor patient services.

Under the VAT amendment, the existing 2% Nation Building Tax remains unchanged. However, the threshold of turnover for Nation Building Tax has been reduced to Rs.3 million from previous Rs.3.75 million.

The Nation Building Tax has been imposed on telephone and telecommunication services as well as on electricity. However, this will not affect the electricity bill.

Meanwhile, 82 goods and services that are exempted from VAT have been publicised.