Question 1

What is APIT/PAYE?

Accepted Answer

APIT (Advance Personal Income Tax) is the current withholding tax system in Sri Lanka, replacing the previous PAYE (Pay As You Earn) system. Under APIT, your employer deducts income tax from your monthly salary based on progressive tax slabs set by the Inland Revenue Department.

Question 2

How is my salary tax calculated in Sri Lanka?

Accepted Answer

Your annual gross salary is compared against the personal relief threshold of LKR 1,200,000. The first LKR 1,200,000 (LKR 100,000/month) is tax-free. Income above this threshold is taxed progressively from 6% to 36% based on official IRD tax slabs.

Question 3

What is the personal relief threshold in Sri Lanka for 2025/2026?

Accepted Answer

The personal relief for 2025/2026 is LKR 1,200,000 per annum (LKR 100,000 per month). This is the amount of annual income that is completely tax-free.

Question 4

What are the income tax rates in Sri Lanka for 2025/2026?

Accepted Answer

Sri Lanka uses progressive tax rates for 2025/2026: 6% on the first LKR 500,000 above relief, 12% on the next LKR 500,000, 18% on the next LKR 500,000, 24% on the next LKR 500,000, 30% on the next LKR 500,000, and 36% on income above LKR 3,700,000.

Question 5

Does EPF affect my income tax in Sri Lanka?

Accepted Answer

No. Neither the employee EPF contribution (8%) nor the employer EPF contribution (12%) affects your income tax calculation. EPF is a separate retirement savings deduction. Your income tax is calculated based on your gross annual salary minus the personal relief threshold.

Question 6

How much tax do I pay on a LKR 200,000 salary in Sri Lanka?

Accepted Answer

On a monthly salary of LKR 200,000, your annual gross is LKR 2,400,000. After the LKR 1,200,000 personal relief, taxable income is LKR 1,200,000. Tax is LKR 30,000 (6% on first 500,000) + LKR 60,000 (12% on next 500,000) + LKR 36,000 (18% on remaining 200,000) = LKR 126,000 per year or approximately LKR 10,500 per month.

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