In a final policy move, government and trade union federation Ravaksur Plus on Thursday morning ratified an agreement in principle that will take effect from July 1. The new tax regime offers breathing room to workers in particular through adjustments to the overtime tax and expanded deductions.
After months of intensive deliberations with unions, tax experts and government delegations, the parties reached agreement on a package of measures designed to directly strengthen the purchasing power of wage earners. The approval by the Council of Governments counts as a formality; in substance, the step is already seen as much-needed relief ahead of the transfer of power to a next cabinet.
The main change is the recalibration of overtime rates: henceforth, overtime up to SRD 2,500 will continue to be taxed at 5 %, where previously only the first SRD 500 fell under that rate. For the SRD 2,500-7,500 segment, 15 % applies; everything above that falls into the 25 % bracket. Vacation pay and gratuities up to SRD 19,500 are also untaxed.
Furthermore, the mortgage interest deduction will be raised from a maximum of SRD 600,000 to SRD 871,500, although this remains below the earlier proposal of Ravaksur Plus (SRD 1.6 million). In 2026, talks reopen for public sector wage negotiations, revision of regular tax rates and payment of overdue CLA allowances from July 2020.
