Tax on retired govt staff allowances withdrawn

The government has withdrawn the provision of income tax on different types of allowances provided to retired government employees. However, civil servants will have to pay taxes for their salaries and festival allowances, according to a notification issued by the Finance Ministry’s income tax department and Internal Resources Division (IRD) on Thursday. Heads of the ministries and divisions concerned have already been informed of the government order, which will come into effect from 1 July, the notification stated. An IRD official said the public servants enjoy various benefits while they go on retirement. Currently, they need not pay taxes except on privilege leaves and gratuity, and holiday and medical allowances. “Taxes on these allowances were imposed on 1 July 2015… But, following the notification, money drawn from these sources will not be considered taxable,” the official added.