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Friday March 1st, 2024

Sri Lanka to introduce India’s digital payment system UPI amid tax evasions

ECONOMYNEXT – Sri Lanka will introduce India’s Unified Payment Interface (UPI), a revolutionary digital payment move to achieve a cashless economy, which may help to tighten loopholes that have allowed for tax evasion in the island nation.

The UPI will help the public to use their smartphone as a virtual debit card.

In other words, people do not need any cash or card to carry out transactions. They can simply use the smartphone as a debit card and send and receive money through it. The UPI is an interface that allows the user to link more than one bank account in one smartphone app and transfer funds without having to share any account number.

Sri Lanka President Ranil Wickremesinghe will witness the launch of Unified Payment Interface (UPI) services in Sri Lanka and Mauritius along with Prime Minister of Mauritius, Pravind Jugnauth and Indian Prime Minister Narendra Modi on Monday 12 via video conferencing, the Indian High Commission in Sri Lanka said.

“India has emerged as a leader in Fintech innovation and Digital Public Infrastructure. Prime Minister (Modi) has placed a strong emphasis on sharing our development experiences and innovation with partner countries,” the Indian High Commission in Colombo said in a statement.

“Given India’s robust cultural and people-to-people linkages with Sri Lanka and Mauritius, the launch will benefit a wide cross-section of people through a faster and seamless digital transaction experience and enhance digital connectivity between the countries.”

It also said the launch will enable availability of UPI settlement services for Indian nationals travelling to Sri Lanka and Mauritius as well as for Mauritian nationals travelling to India.

Officials at the state-rub Inland Revenue Department (IRD) say the move will help to tax a person at the point of receiving funds or earning income from multiple sources to various bank accounts.

BOOSTS OVERALL TAX REVENUE 

According to Indian tax experts, people in India have been rapidly switching to e-wallets due to the various restrictions, limitations, and withdrawal fees in bank accounts.

These digital wallets and UPI transactions are very quick and also save the people from the hassle of carrying cash or a card, they say.

And it can be linked to multiple bank accounts. It is convenient even for those who are not very comfortable with technology.

The UPI saves the taxpayers from paying more taxes, while serving as a foolproof method for tracking transactions and reduces the use of cash which is hard to track.

Electronic transactions also help increase the overall tax revenue of the government.

Local tax experts say tax evaders had used multiple bank accounts under personal names as well as joint bank accounts in the past. They believe the UPI could effectively address the weakness in Sri Lanka’s existing tax collection system with no physical meeting with tax officials. ‘

In India, UPI transactions up to.50,000 Indian rupees are exempt from tax. Any amount exceeding this limit, received through UPI apps or digital wallets, is treated as a gift and taxed as per the provisions applicable to income from other sources. However, if the money received is a repayment of any sum owed to you, it will not be taxed. (Colombo/Feb 12/2023)

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Sri Lanka’s RAMIS online tax collection system “not operatable”: IT Minister

ECONOMYNEXT – Sri Lanka’s online tax collection system RAMIS is “not operatable”, and the Ministry of Information Technology is ready to do for an independent audit to find the shortcomings, State IT Minister Kanaka Herath said.

The Revenue Administration Management Information System (RAMIS) was introduced to the Inland Revenue Department (IRD) when the island nation signed for its 16th International Monetary Fund (IMF) programme in 2016.

However, trade unions at the IRD protested the move, claiming that the system was malfunctioning despite billions being spent for it amid allegations that the new system was reducing the direct contacts between taxpayers and the IRD to reduce corruption.

The RAMIS had to be stopped after taxpayers faced massive penalties because of blunders made by heads of the IT division, computer operators and system errors at the IRD, government officials have said.

“The whole of Sri Lanka admits RAMIS is a failure. The annual fee is very high for that. This should be told in public,” Herath told reporters at a media briefing in Colombo on Thursday (29)

“In future, we want all the ministries to get the guidelines from our ministry when they go for ERP (Enterprise resource planning).”

President Ranil Wickremesinghe’s government said the RAMIS system will be operational from December last year.

However, the failure has delayed some tax collection which could have been paid via online.

“It is not under our ministry. It is under the finance ministry. We have no involvement with it, but still, it is not operatable,” Herath said.

“So, there are so many issues going on and I have no idea what the technical part of it. We can carry out an independent audit to find out the shortcomings of the software.”

Finance Ministry officials say IRD employees and trade unions had been resisting the RAMIS because it prevents direct interactions with taxpayers and possible bribes for defaulting or under paying taxes.

The crisis-hit island nation is struggling to boost its revenue in line with the target it has committed to the IMF in return for a 3 billion-dollar extended fund facility. (Colombo/Feb 29/2024) 

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Sri Lanka aims to boost SME with Sancharaka Udawa tourism expo

ECONOMYNEXT – Sri Lanka is hosting Sancharaka Udawa, a tourism industry exhibition which will bring together businesses ranging from hotels to travel agents and airlines, and will allow the small and medium sector build links with the rest of the industry, officials said.

There will be over 250 exhibitors, with the annual event held for the 11th time expected to draw around 10,000 visitors, the organizers said.

“SMEs play a big role, from homestays to under three-star categories,” Sri Lanka Tourism Promotion Bureau Chairman, Chalaka Gajabahu told reporters.

“It is very important that we develop those markets as well.”

The Sancharaka Udawa fair comes as the Indian Ocean island is experiencing a tourism revival.

Sri Lanka had welcomed 191,000 tourists up to February 25, compared to 107,639 in February 2023.

“We have been hitting back-to-back double centuries,” Gajabahu said. “January was over 200,000.”

The exhibition to be held on May 17-18, is organized by the Sri Lanka Association of Inbound Tour Operators.

It aims to establish a networking platform for small and medium sized service providers within the industry including the smallest sector.

“Homestays have been increasingly popular in areas such as Ella, Down South, Knuckles and Kandy,” SLAITO President, Nishad Wijethunga, said.

In the northern Jaffna peninsula, both domestic and international tourism was helping hotels.

A representative of the Northern Province Tourism Sector said that the Northern Province has 170 hotels, all of which have 60-70 percent occupancy.

Further, domestic airlines from Colombo to Palali and the inter-city train have been popular with local and international visitors, especially Indian tourists. (Colombo/Feb29/2024)

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Sri Lanka rupee closes at 309.50/70 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 309.50/70 to the US dollar Thursday, from 310.00/15 on Wednesday, dealers said.

Bond yields were slightly higher.

A bond maturing on 01.02.2026 closed at 10.50/70 percent down from 10.60/80 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.10 percent from 11.90/12.00 percent.

A bond maturing on 01.07.2028 closed at 12.20/25 percent.

A bond maturing on 15.07.2029 closed at 12.30/45 percent up from 12.20/50 percent.

A bond maturing on 15.05.2030 closed at 12.35/50 percent up from 12.25/40 percent.

A bond maturing on 01.07.2032 closed at 12.55/13.00 percent up from 12.50/90 percent. (Colombo/Feb29/2024)

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