Prices of several goods and services to rise with VAT hike

COLOMBO (News 1st); Sri Lanka's Value Added Tax (VAT) rate will increase from 15% to 18% effective Monday (01).

Previously exempt items, such as certain goods and services, will now be subject to the 18% VAT, while many other goods will see an increase in VAT from 15% to 18%. 

Previously exempt items like diesel, petrol, and liquefied petroleum gas (LPG) will now be subject to VAT. 

However, the existing 7.5% Ports and Airport Development Levy on these products will be scrapped. 

Consequently, the overall tax burden on diesel and petrol will be 10.5%.

However, liquefied petroleum gas or cooking gas will see a net increase as the 18% VAT replaces the current 2.5% port and airport development levy, pushing the overall tax burden to 15.5%.

The DCSL announced that the price of alcohol will also increase by 3 percent from Monday (01).

Telephone charges will also increase from Monday (01) with the increase in VAT.

Telecommunication providers said an additional 3 percent tax will be added to the existing taxes.

The total tax percentage of 38.4 percent, with a 2 percent cess tax on calls, 15 percent telecommunication tax, 2.5 percent social security tax, and 15 percent VAT, will become nearly 42 percent with the VAT amendment.

Telecommunication providers said the current tax rate of 20.3 percent for internet services will also increase to 23.5 percent.

Currently, the taxes levied on internet services include cess, social security tax, and VAT.

President of the Ceylon Cellular Vendors Association Samith Senarath said with the VAT hike, tax amounting to Rs.18,000 will be imposed on a mobile phone worth Rs.100,000.

The National Water Supply and Drainage Board said water bill rates will also increase by 3 percent from this month.

Deputy General Manager Piyal Pathmanatha said an additional VAT of 3 percent will be added to the water bill from this month, with the VAT amendment.

Secretary General of the National Joint Three-Wheeler Drivers and Manufacturers Association L Rohana Perera said the rate for the second kilometer will be increased from Rs.80-100.

President of the All Ceylon Restaurant and Restaurant Owners Association Harshana Rukshan said the price of a packet of rice will also increase by Rs.25 from Monday (01).