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How to Legally Avoid Withholding Tax (WHT) Deductions in Sri Lanka – 2025 Guide
With the recent increase in Withholding Tax (WHT) on interest income in Sri Lanka (from 5% to 10% as of April 1, 2025), many individuals are seeking ways to minimize or legally avoid unnecessary deductions.

Here’s a practical guide on how eligible taxpayers can avoid WHT deductions while staying fully compliant with Sri Lankan tax laws.

🔹 1. Understand Who Is Exempt
Under current regulations, individuals with an annual assessable income not exceeding Rs. 1.8 million (Rs. 150,000 per month) are exempt from WHT on interest income. This exemption is designed to protect low-income earners and ensure fair tax treatment.

🔹 2. Submit a Self-Declaration Form
If you qualify for exemption:

Download the official self-declaration form (available from your bank or the Inland Revenue Department).

Fill in your personal details and declare that your income is below the Rs. 1.8 million threshold.

Submit the form to each bank or financial institution where you hold interest-bearing accounts.

Once verified, the institution will not deduct WHT from your future interest earnings.

📝 Tip: This declaration must be submitted annually or as required by your financial institution.

🔹 3. Maintain Accurate Records
Keep a copy of:

The submitted declaration form

Acknowledgement from the bank

Your bank statements showing interest payments

These records are essential in case the Inland Revenue Department requests proof or for use in future tax returns.

✅ Final Thoughts
Avoiding WHT deductions is legal and encouraged for those who qualify under Sri Lankan tax law. However, it's important to follow the correct procedure and remain transparent with financial institutions and the tax authority.

At Bookkeeping.lk, we help individuals and businesses with:

WHT exemption applications

Tax return filing and refunds

Strategic tax planning

📞 Need assistance? Reach out to us today and avoid unnecessary tax deductions legally and efficiently.