The Value Added Tax (VAT) and the Nation Building Tax which were passed in parliament on October 26, 2016 will be effective from November 1. Accordingly, prevailing 11% VAT will be increased upto 15%.
The VAT registration ceilings for a quarter and a year on retail and wholesale trading will remain at Rs.12.5 million or Rs.50 million respectively. The VAT registration limit for other goods and services will be Rs.3 million a quarteror Rs.12 million per year.
VAT has been imposed on cigarettes, Liquor, telephone services, electrical equipment, perfumes, jewelry and powdered milk. In addition, VAT will also be imposed on consultation fees of doctors and medical specialists(including channel services) and hospital room charges.
According to the new Amendment, the existing 2% Nation Building Tax will remain unchanged. However, the turnover limit to charge Nation Building Tax has been changed. The existing limit per quarter Rs.3.75 million has been reduced to Rs.3 million.
Nation Building Tax will also apply to telephone services and electricity as well. However, this will not affect the electricity bill.
Goods exempted from VAT -
Wheat, Wheat flour, Raw rice, Sugar, Dhal, Dried fish, Canned fish, Maldivefish, Condiment, Bread, Liquid milk, Tea, Rubber, Coconut, Coconut oil, Coconut extract, Eggs, Prawns, Fruits, Vegetables, Potatoes, Sprats, Red Onion, Big onion, Garlic, Green Gram, Chilies, Kaupi, Gram, Black gram, Coriander, Peanuts, Fertilizer, Drugs, Drug manufacturing machines, Drug manufacturing utensils, Drug packaging machines, Ayurveda processing, Wheel chairs, Crutches, Hearing aids, White can, Brail machines, Brail papers, Spectacle frames, Spectacle manufacturing raw material, Out Patients’ services, Dialyses, Diagnoses tests, Surgical services, Diesel, Transport services, Kerosene, Petrel, Aero plane fuel, Production Tax charged vehicles, Bowsers, Agricultural seeds, Agricultural plants, Agricultural machines, Tractors, Paddy milling machines, Bakery machines, Milk processing machines, Fishing gear, Green houses, Construction ware, Electricity, Solar power generating equipment, Power saving CFL bulbs, Power saving CFL bulbs manufacturing raw material, Education services, Library services, Computer and accessories, Computer software, Printed books, Sports ware, Life insurance, Mobile phones, Gem, Pearl and Diamond, Gold and Platinum, and Sale of housing and accommodation.