The VAT amendment bill was passed with a majority of 53 votes with 76 Members of Parliament voting in favour and 23 voting against the bill.
The government expects to generate an income of 1.8 billion rupees in taxes in 2016 through the VAT amendment.
The revised 15 per cent Value Added Tax rate. The Nation Building Tax rate of 2% will remain unchanged.
Some of the items subjected to the new VAT rate are Tobacco related products, alcohol, telecommunication charges, electronics, perfumes and several food items.
However, the Ministry of Finance said several goods and services have been exempted from VAT following the amendment.
Minister of Finance Ravi Karunanayake said 81 goods and services including wheat flour, bread, milk powder, rice, tea, coconuts, eggs, sugar, dhal and medicine is exempted from taxes.
Meanwhile, the price of a packet of 20 cigarettes will also increase between a range of 400 rupees and 1,100 rupees.
Minister of Finance Ravi Karunanayake said the VAT threshold has also been revised to 50 million rupees for wholesale and retail businesses following the amendment to the VAT Bill.
