Finance Act – 1961

Arrangement of Sections

1. Short title.

PART I

Nationalisation of the Bank of Ceylon

2. Vesting of ordinary shares of the Bank in the Government.

3. Compensation to be payable in respect of the ordinary shares of the Bank vested in the Government.

4. Compensation in respect of shares vested in the Government to be charged on the Consolidated Fund.

5. Limitation of the power of the Bank to carry on certain kinds of business.

6. Certain acts not to be done without the prior authority of the Secretary to the Treasury.

7. Former Directors of the Bank deemed to have administered the affairs of the Bank for and on behalf of the Government.

8. Special provisions in respect of certain matters relating to the Bank.

9. Government Director deemed to have had the right to vote at meetings of the Directors.

10. Power to make regulations to give effect to certain matters arising out of this Part of this Act.

11. Provisions of this Part of this Act to prevail over the Bank of Ceylon Ordinance.

12. Interpretation.

PART II

Surcharge on Income Tax, Amendments to the Income Tax Ordinance, Land Tax Act and Personal Tax Act, the Imposition and Levy of a Surtax, and the Disposal of Surplus Income

13. Every person chargeable with income tax for the year of assessment commencing on April 1, 1961, liable to pay a surcharge equivalent to fifteen per centum of the income tax payable by him for that year.

14. Amendment of section 23F of the Income Tax Ordinance.

15. Non-applicability of sections 3 and 4 of the Land Tax Act for any year of assessment commencing on or after April 1, 1961.

16. Land tax for the year of assessment commencing on April 1, 1961, and the succeeding year of assessment.

17. Application of sections 7 and 8 of the Personal Tax Act in respect of any year of assessment commencing on or after April 1, 1961.

18. Imposition and levy of surtax and payment of balance surplus income to Commissioner.

19. Issue of National Development Bonds to persons who have paid moneys under section 18(2).

20. Regulations.

21. Interpretation.

PART III

Opening of Accounts in Banks

22. Opening of accounts in Banks on or after the relevant date.

22A. Special provision to enable accounts to be opened in Banks other than those mentioned in section 22(1).

23. Managers of Banks required to furnish information for the purposes of this Part.

PART IV

Sales Tax

24. Imposition of sales tax.

25. Presumptions.

26. Responsibility of registrant to pay sales tax.

27. Regulations.

28. Determination of value of any article subject to the sales tax.

29. Interpretation.

PART V

Withdrawal of Rice Subsidy from Individuals Liable to Income Tax

30. Power of Commissioner to levy and recover from individuals liable to income tax of the Government rice subsidy.

31. Regulations.

PART VI

Levy of the National Development Tax

32. Non-application of this Part to the emoluments of certain persons.

33. Levy of the National Development Tax.

34. Limits for the levy of the National Development Tax.

35. Deduction of National Development Tax.

36. Payment of National Development Tax to Commissioner.

36A. Payment of National Development Tax by employees in certain circumstances

37. Recovery of the National Development Tax.

38. Amount of the National Development Tax paid by an employee shall be allowed as a deduction for the purposes of the levy of income tax.

39. Interpretation.

PART VII

Registration of Professions and Businesses

40. Duty of person practicing a profession to register himself in the register.

41. Conditions for registration.

42. Duration of registration.

43. Persons getting an income of over three thousand six hundred rupees to pay National Development Tax on such income.

44. Duty of competent authority to specify in certificate issued to any person that such person has paid the National Development Tax.

45. Consequence of default in payment by any person practicing a profession of the National Development Tax or any installment thereof.

46. Appropriate fee.

47. Duty of proprietor of a business to register such business, and himself as proprietor thereof, in the register.

48. Conditions for registration of businesses.

49. Duration of registration of business.

50. Persons getting an income of over three thousand six hundred rupees from any business to pay National Development Tax on such income.

51. Duty of competent authority to specify in the certificate that the proprietor has paid or undertaken to pay the National Development Tax.

52. Consequence of default in payment by any person carrying on a business of the National Development Tax or any installment thereof.

53. Appropriate fee for registration of a business.

54. Issue of receipts by competent authority.

55. Amount of the National Development Tax paid by any person under this Part shall be allowed as a deduction for the purposes of the Income Tax Ordinance.

55A. Liability of person who practices a profession or carries on a business to pay registration fee and National Development Tax even if he has not caused himself or his business to be registered.

56. Power to make regulations.

PART VIII

General

57. Appointment of competent authorities.

58. Power to require information.

59. Payment of National Development Tax in special cases.

59A. Establishment of the National Development Fund.

60. Regulations.

61. Offences.

61A. Offences by body of persons.

62. Protection for action taken under this Act.

63. Interpretation.

SCHEDULES.

65 of 1961,

9 of 1962,

3 of 1963,

8 of 1966,

36 of 1968.

AN ACT to enact the provisions of law necessary to give legal force to certain financial proposals for the Financial Year commencing on October 1, 1961, and ending on September 30, 1962.

[Date of Commencement: 12th October, 1961]

1. Short title.

This Act may be cited as the Finance Act.

PART I

Nationalisation of the Bank of Ceylon

2. Vesting of ordinary shares of the Bank in the Government.

All the ordinary shares of the Bank of Ceylon (in this Part of this Act referred to as "the Bank”) shall be deemed to have vested in the Government on the relevant date, and accordingly the Government shall be deemed as from that date to have been, and to be, the holder of such shares.

3. Compensation to be payable in respect of the ordinary shares of the Bank vested in the Government.

(1) Compensation in respect of each ordinary share of the Bank which is deemed to have vested in the Government shall be paid by the Government to the person who was the holder of that share on the day immediately prior to the date of such vesting on the basis of the price paid by that person for such share or, if that person became such holder not by acquisition for valuable consideration but by operation of law, or by a voluntary transfer, without such consideration, on the basis of the price paid for such share by the person who last was the holder of such share by virtue of acquisition for such consideration.

(2) Compensation in respect of the ordinary shares of the Bank which are deemed to have vested in the Government shall be payable in cash, or in five per centum negotiable Government stock, or both in such cash and such stock in such proportion as may be determined by the Minister. Such stock shall be deemed to have been issued under the Registered Stock and Securities Ordinance. The date of redemption of any such stock shall be ten years.

(3) No person to whom any stock has been issued by way of compensation under subsection (2) shall be entitled to alienate the whole or any part of such stock except by way of gift or will.

(4) Any dispute between the Bank and any other person as to the amount of compensation payable to that person under this Part of this Act shall be referred by the Bank to the Minister whose decision thereon shall be final and conclusive.

(5) For the purposes of this section, a person shall be deemed, at all times, to have been the holder of an ordinary share of the Bank on the day immediately prior to the date on which that share is deemed to have vested in the Government if such person was on that day the owner of that share by virtue of a transfer effected by way of sale through a broker, notwithstanding—

(a) that such transfer was not on that day registered in the books of the Bank; and

(b) that such person was not on that day a duly registered holder of that share,

and accordingly the term "holder”, in relation to any ordinary share of the Bank, occurring in subsection (1) Shall be deemed, at all times, to have included such person.

[S 3(5) am by s 2 of Act 8 of 1966.]

[Vide section 35 of the Finance (Amendment) Act, No. 9 of 1962; Vide section 23 of the Finance (Amendment) Act, No. 3 of 1963.]

4. Compensation in respect of shares vested in the Government to be charged on the Consolidated Fund.

The compensation payable in respect of the shares which are deemed to have vested in the Government shall be charged on the Consolidated Fund of Ceylon.

5. Limitation of the power of the Bank to carry on certain kinds of business.

The Bank shall be deemed not to have been authorised to carry on the several kinds of business hereafter specified during the period which commenced on the relevant date and ended on the day immediately prior to the date of commencement of this Act except under and in accordance with any general or special directions issued in that behalf by the Secretary to the Treasury, and accordingly any such business so transacted by such Bank in contravention of the preceding provisions of this section shall be deemed to have been, and to be, null and void—

(a) to negotiate loans and advances;

(b) to borrow or raise money;

(c) to acquire any other business;

(d) to enter into any arrangement for sharing profits, union of interest, co-operation, joint adventure, reciprocal concession, or otherwise with any other person; and

(e) to sell or dispose of the entire undertaking of the Bank or any part thereof.

6. Certain acts not to be done without the prior authority of the Secretary to the Treasury.

All transactions of any kind whatsoever in the ordinary shares of the Bank whether by way of sale, transfer or otherwise, the declaration and payment of dividends on such shares, the issue of debentures, and any other transactions relating to any sale or other disposal of the investments of the Bank during the period which commenced on the relevant date and ended on the day immediately prior to the date of commencement of this Act, shall be deemed to have required the prior approval of the Secretary to the Treasury, and accordingly any such transactions, declarations, payments and issues made, entered into or effected in contravention of the preceding provisions of this section shall be deemed to have been, and to be, null and void.

7. Former Directors of the Bank deemed to have administered the affairs of the Bank for and on behalf of the Government.

The Directors of the Bank during the period which commenced on the relevant date and ended on the day immediately prior to the date of commencement of this Act, shall be deemed to have, during that period, carried on the business of the Bank for and on behalf of the Government, and accordingly any act or thing done by them under the Bank of Ceylon Ordinance during that period shall, save as otherwise expressly provided in this Part of this Act, be deemed not to have been, and not to be, null and void by reason only of the fact that the Government was the sole shareholder of the Bank.

8. Special provisions in respect of certain matters relating to the Bank.

The following provisions shall have effect in respect of the Bank—

(a) The Directors of the Bank on the day immediately prior to the date of commencement of this Act shall cease to hold office as such Directors on that day.

(b) The management and administration of the business and affairs of the Bank shall be vested in a Board of Directors constituted as provided in this section.

(c) The Board of Directors so constituted may exercise, discharge or perform the powers, functions or duties of the Bank for the purpose of carrying on the business, and administering the affairs, of the Bank.

(d) The Board of Directors of the Bank shall consist of six Directors, five of whom shall be appointed by the Minister and the other shall be the person for the time being holding the office of Secretary to the Treasury. Each Director so appointed is in this section referred to as an "appointed Director”, and the Secretary to the Treasury is in this section referred to as the "ex-officio Director”.

(e) A Senator or a Member of Parliament shall not be qualified to be a Director.

(f) The Minister shall appoint one of the appointed Directors as the Chairman of the Board of Directors.

(g) Every appointed Director shall hold office for a period of three years, unless he is earlier removed from office or vacates his office.

(h) If any appointed Director is temporarily unable to discharge the duties of his office on account of ill health, or absence from Ceylon, or any other cause, the Minister may appoint some other person to act as a Director in his place.

(i) If the ex-officio Director is unable to attend any meeting of
the Board of Directors, he may authorise any other officer to be present on his behalf at such meeting; and the officer so authorised shall be deemed for the purpose of such meeting to be a member of the Board of Directors.

(j) An appointed Director may resign his office by letter addressed to the Minister.

(k) The Minister may, if he thinks it expedient to do so, remove an appointed Director from office.

(l) A Director who vacates office by resignation or effluxion of time shall be eligible for reappointment.

(m) A Director may be remunerated out of the funds of the Bank in such manner and at such rates as the Minister may determine.

(n) The ex-officio Director shall have all the same rights and privileges as the appointed Directors.

9. Government Director deemed to have had the right to vote at meetings of the Directors.

The Government Director within the meaning of the Bank of Ceylon Ordinance shall be deemed, during the period which commenced on the relevant date and ended on the day immediately prior to the date of commencement of this Act, to have been entitled to vote at meetings of the Directors of the Bank.

10. Power to make regulations to give effect to certain matters arising out of this Part of this Act.

Regulations may be made under this Act for the purpose of making all such provisions as may be necessary to enable the Bank to continue to function as a Corporation under the Bank of Ceylon Ordinance with the Government as the sole shareholder of the Bank, and in particular, but without prejudice to the generality of the foregoing provisions of this section, such regulations may make all such amendments in, or modifications to, the Bank of Ceylon Ordinance as may be necessary for achieving that purpose and for giving effect to or carrying out the principles or provisions embodied in the preceding provisions of this Part of this Act.

11. Provisions of this Part of this Act to prevail over the Bank of Ceylon Ordinance.

The provisions of this Part of this Act or any regulations made thereunder shall have effect notwithstanding anything to the contrary in the Bank of Ceylon Ordinance or any regulations made thereunder or any other written law, and accordingly the Bank shall be deemed not to have ceased to be a Corporation under that Ordinance by reason of the fact that the Government is the sole shareholder of the Bank.

12. Interpretation.

In this Part of this Act, the expression "Bank of Ceylon Ordinance” means the Bank of Ceylon Ordinance as subsequently amended.

PART II

Surcharge on Income Tax, Amendments to the Income Tax Ordinance, Land Tax Act and Personal Tax Act, the Imposition and Levy of a Surtax, and the Disposal of Surplus Income

13. Every person chargeable with income tax for the year of assessment commencing on April 1, 1961, liable to pay a surcharge equivalent to fifteen per centum of the income tax payable by him for that year.

(1) Every person who is chargeable with income tax for the year of assessment commencing on April 1, 1961, shall, notwithstanding anything contained in any other written law or in any convention, grant or agreement, be liable to pay a surcharge equivalent to fifteen per centum of the amount of the income tax payable by him for that year of assessment.

(2) The surcharge referred to in subsection (1) shall, in the case of a non-resident company, be reckoned on the amount of income tax that would have been payable by such company for the year of assessment commencing on April 1, 1961, if the sum equal to six per centum of the taxable income of such company for that year of assessment, which should have formed part of the amount of income tax in accordance with the provisions of section 57C of the Income Tax Ordinance, had not been included in the amount of income tax.

(3) The surcharge referred to in subsection (1) shall, in the case of any person who is entitled to a set-off under subsection (4) of section 45, or under subsection (6), or subsection (7) or subsection (8) of section 57D, of the Income Tax Ordinance, be reckoned on the amount of income tax that would have been payable by such person for the year of assessment commencing on April 1, 1961, if such set-off had not been made.

(4) For the purposes of the assessment, payment and recovery of the surcharge referred to in subsection (1), the provisions of Chapter X, Chapter XI, Chapter XII, and Chapter XIII of the Income Tax Ordinance shall apply in all respects as though the surcharge were income tax payable for the year of assessment commencing on April 1, 1961.

(5) Where any person is under section 89 of the Income Tax Ordinance entitled to have refunded any amount paid by him as income tax in excess of the amount which he was properly chargeable for the year of assessment commencing on April 1, 1961, such person shall, if he has paid the surcharge referred to in sub-section (1), be in addition entitled to have refunded an amount representing fifteen per centum of the amount refunded under the said section 89.

14. Amendment of section 23F of the Income Tax Ordinance.

In respect of each year of assessment commencing on or after April 1, 1961, section 23F of the Income Tax Ordinance shall have effect as if, for the expression "one thousand rupees” occurring in each of the subsections (2) and (4) of that section, there were substituted the expression "five hundred rupees” and for the expression "two thousand rupees” occurring in subsection (4) of that section, there were substituted the expression "three thousand rupees”.

15. Non-applicability of sections 3 and 4 of the Land Tax Act for any year of assessment commencing on or after April 1, 1961.

Sections 3 and 4 of the Land Tax Act, No. 27 of 1961, shall not apply for any year of assessment commencing on or after April 1, 1961, but save as herein before provided the other sections of that Act shall continue to apply to any such year of assessment.

16. Land tax for the year of assessment commencing on April 1, 1961, and the succeeding year of assessment.

There shall be charged for the year of assessment commencing after April 1, 1961, and the succeeding year of assessment from every person who is the owner of any land in Ceylon the total extent of which on the last date of the year preceding that year of assessment is not less than twenty acres (such total extent including the extent of any share of any land owned by such person in common with any other person) land tax under the Land Tax Act, No. 27 of 1961, at the following rates:

Where the total extent of land is not less than twenty acres and not more than fifty acres—

Rs. 5 for each acre of the total extent of such land.

Where the total extent of land is more than fifty acres and less than one hundred acres—

Rs. 10 for each acre of the total extent of such land.

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