This is with reference to the Letter to the Editor with the above title, which appeared in The Island of 14-9-08 from a Senior Citizen like me.

I would like him to refer to the circular dated 27-03-07 issued by the Department of Inland Revenue to banks and financial institutions. A request to any of them will enable him to obtain a copy. This circular was issued after amending the Act No 10 of 2006 to represent the Mahinda Chintanaya. This gives two exemptions for Interest Income for senior citizens exemption income of Rs 200,000 per year and also another Rs 5000/- per month to any individual. However, his concerns are clarified to his satisfaction under 3 Quantum of deduction rates 3 (ii) (a) and (b) states thus:

(a) His/her assessable income (i.e. total income excluding exempt income) for year of assessment does not exceed Rs. 300,000,then tax deductions should not be made from such interest for that year of assessment, or

(b) His/her income for that year of assessment exceeds Rs 300,000 but does not exceed Rs 600,000, then tax should be deducted from such interest for that year of assessment.

From the above, since (a) and (b) should be read together and not in isolation, it is obvious that the tax should be deducted from the balance of income after giving the first 300,000 of income tax free for if it was intended to tax the full income which is not logical, then it would have stated that the full income should be taxed at the rate of 2.5 %.

From the above, it is obvious that the Mahinda Chintanaya has done more than it promised to do for senior citizens. But it appears that some bank or financial institution official is harassing senior citizens.