Opa at your service

Questions and Answers

Withholding Tax on Debenture-interest
 

Procedure to get pension remitted abroad

Question: I am a Government pensioner drawing pension from the Kesbewa Divisional Secretariat Office I intend to migrate in the near future to the USA where all my children have taken up permanent residence. Please inform the procedure that has to be followed to get my pension remitted to the USA once I settle down there.

This information will be very useful to other pensioners who intend to settle down abroad.

S. Midigaspe, Piliyandala

Answer: Yes, you can get your pension remitted monthly to the country to which you are immigrating, in your case the USA. You can contact the Divisional Secretariat at Kesbewa or go to the Director General, Pension office, Maligawatte. You will have to fill the necessary forms and go through the formalities.

You will have to provide proof of your migration and approval etc. Once you migrate you will have to send a specified form filled monthly and attested as required, to Sri Lanka for your pension to be remitted. This is to ensue that the pension is not paid to a deceased person.

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Question: Thank you very much for prompt action taken on my letter.

I regret very much, that the Bank has not replied my letter. Instead it has spoken about non-existing things such as (1) if the pension is deposited in a Savings Account (2) if I had paid instalments for another 5 years; the pension would have been double.

Sir, my question is simple; I would like to know why the 3 accounts do not get the interest on the outstanding balance prior to the commencement of the payment of the pension, for 8 months, 6 months and 9 months, respectively for account Nos. 64, 70 and 71.

I am extremely sorry to have troubled you again.

Dr. B. Mallikarathchi, Nivitgala

Answer: This Bank of Ceylon Pension Scheme operates on the basis of your 240 instalments contribution. The pension after 20 years of your joining the scheme is paid out of the capital arising from your contribution and the interest earned thereon. During the 20 years of your contributing or even thereafter you cannot withdraw either your contribution or the interest.

The Bank maintains a ledger in which all instalments and interest are posted. Your pension savings book is manly to reflect your contribution and the ledger balance including the interest for your information. Once payment of the pension commences, this pass book becomes an inactive book of passed records only. As long as the bank pays you the promised or correct pension you don’t have to worry about the interest for the last 6 to 9 months not reflected in your pension pass book which is no longer active. Its only a lapse on the part of the Bank to update your pass book but no financial loss to you. Trust it’s clear to you now.

Incorrect monthly pension: No. 431194

Question: 1. I beg to invite your kind attention to my Registered letter posted on July 19 from Kotahena Agency Post office and express letter posted from Borella Post office on July 22 regarding the above matter.

2. Readers were promised that Daily News OPA At Your Service will appear on every Thursday in the Daily News.

3. So anticipating your reply to my problem, I bought the Daily News of Thursday, July 31 and was bitterly disappointed as your said column itself as promised was not there, Why?

4. Please be good enough to pay your kind attention to my problem as contained in detail in my registered letter and express letter and give your reply by post to the above address if publication is not possible.

5. The Divisional Secretary, Ja-Ela pays me a monthly pension of Rs. 9,108/46 for the last two years or so whereas the correct amount (an Accountant dealing with pensions in another office gave me) is Rs. 11,570/16 resulting in an underpayment of Rs. 2,468/70 per month, which an old pensioner like me can ill afford to ignore.

K. Mahalingam, Kotahena

Answer: We are sorry about the delay in replying readers questions as Daily News was not able to give us space for sometime. You have also to wait for your turn as there are a long queue of questions to be answered. We contacted the Accountant in charge of Pension at the Ja-Ela Divisional Secretariat.

According to him there were arrears of several months of your pension accumulated due to your being away, and that he has paid you all the arrears after your return to Colombo. He however agrees that there is an anomaly in the pension paid to you which he was not able to correct. Due to your having taken up residency in Kotahena, your pension file has now been transferred to the Divisional Secretary’s office at the Colombo Kachcheri at Dam Street. You have to visit the Colombo Kachcheri and take up your case as your file is there now.

We contacted the Director General, Pensions at Maligawatte regarding your case and the advice given by this office is for you to meet the Accountant Ms. Seneviratne at the Pensions Department at the Colombo Kachcheri and explain your case to her.

Complaint made to Consumer Affairs Authority

Question: Many thanks for reviving, an issue that I thought has been thrusted to the limbo of forgotten matters. I have attached hereto a copy of the letter dated 31.10.07 that was the main complaint and which is in the CAA file receipt of which has been acknowledged by them. However, no action has been taken by the CAA. This letter would explain the core issue of the problem.

W.W. Amaratunga, Kelaniya

Answer: There is no point in our contacting the Consumer Affairs Authority; instead we contacted the supermarket concerned. They were very polite and regret the inconvenience caused to you. They are wondering as to whether you ever brought this up to their notice or whether the then Manager had not been cordial to your complaint.

You have been requested to meet the current Manager of this supermarket Sanjiva Francis who will attend to your complaint favourably.

There is an unwritten rule to say ‘Buyer be Aware’. Your son should have taken this matter up then and there. Such things happen very often in most of the supermarkets as the pricing in on the computer and it may not be practical for them to check all their price marked stocks.

Non-receipt of Interest on National Pension Scheme Account of Bank of Ceylon for latter part of the scheme

Question: I am a retired Government teacher and my pension is exempt from Income Tax. I have an investment in debentures in a pubic finance company. The Company had deducted Withholding Tax in paying me the annual interest. My liable income do not exceed Rs. 300,000 per year.

I understand that debentures are debt instruments of Companies, and they are treated similar to Deposits in Banks and other Financial Institutions.

I asked the concerned Company to return WHT so deducted before they could remit same to the Inland Revenue Department.

The Company has not responded despite several reminders. Please advise me as to whether the Company is not in error in deducting WHT from my interest and how I can get my refund early.

N. Dissanayake, Mt. Lavinia

Answer: Yes-Withholding Tax is deductible from debenture interest as it is another form of Income yielding Investment. Eve dividends from share investments are subjected to WHT.

However, as stated by you if your total income from all your investments other than your pension does not exceeds Rs. 300,000 per annum., you are not liable for WHT on this income. The onus of informing the Financial Company is yours.

Most of the banks send a declaration form to all their customers requesting to declare whether the total (taxable) income is below Rs. 300,000 or Rs. 600,000 or above, in order to ascertain whether the customer is liable for WHT and if so at what rate.

Other Companies do not send such a declaration form as a practice. Therefore, the customer/ investor should write to them and inform if they are not liable for WHT.

Even at this stage you should give it to them in- writing. As for the WHT already deducted, they would have remitted it within one month.

You have to apply to the Tax Department for a refund, if the Company claims that they have already remitted. In order to get a refund from the Tax Department you may have to submit a tax return form and open a file.

Send your questions The Organisation of Professional Associations of Sri Lanka (OPA) will cover questions in all professions and subjects of common interest to the public in the ‘Daily News OPA at Your Service’ page every Thursday. Please make your question brief. Questions can be directed to the OPA on e-mail: [email protected] or [email protected], [email protected] Fax: 2559770 or write to the Professional Centre, 275/75, Prof. Stanley Wijesundera Mawatha, off Bauddhaloka Mawatha, Colombo 7.