Tax rates explained
What changed in Budget 2027
Proposed rates from Budget 2027, effective 1 April 2027 (Y/A 2027/28), pending legislation. Monthly figures.
| Band | Now (2026/27) | Budget 2027 |
|---|---|---|
| Tax-free | Rs. 150,000 | Rs. 162,500 |
| 6% | Next Rs. 83,333 | Next Rs. 70,833 |
| 12% | No band | Next Rs. 50,000 |
| 18% | Next Rs. 41,667 | Next Rs. 50,000 |
| 24% | Next Rs. 41,667 | Next Rs. 50,000 |
| 30% | Next Rs. 41,667 | Next Rs. 50,000 |
| 36% | Above Rs. 358,333 | Above Rs. 433,333 |
Yearly, the tax-free amount rises from Rs. 1,800,000 to Rs. 1,950,000 and a new 12% band is added. Anyone earning Rs. 162,500 or more a month would pay Rs. 750 to Rs. 15,750 less tax a month.
Budget 2027 proposed tax table
Monthly. Proposed in the Budget Speech from 1 April 2027, not yet law.
| Monthly taxable income | Tax rate |
|---|---|
| Up to Rs. 162,500 | 0% |
| Rs. 162,500 to Rs. 233,333 | 6% |
| Rs. 233,333 to Rs. 283,333 | 12% |
| Rs. 283,333 to Rs. 333,333 | 18% |
| Rs. 333,333 to Rs. 383,333 | 24% |
| Rs. 383,333 to Rs. 433,333 | 30% |
| Above Rs. 433,333 | 36% |
Budget 2027 example: Rs. 300,000 salary
| Now (2026/27) | Budget 2027 | |
|---|---|---|
| PAYE tax | Rs. 18,500 | Rs. 13,250 |
| EPF 8% | Rs. 24,000 | Rs. 24,000 |
| Take-home pay | Rs. 257,500 | Rs. 262,750 |
Now (2026/27): 6% on Rs. 83,333, 18% on Rs. 41,667 and 24% on Rs. 25,000 above the Rs. 150,000 tax-free amount. Budget 2027: 6% on Rs. 70,833, 12% on Rs. 50,000 and 18% on Rs. 16,667 above Rs. 162,500.
Budget 2027 income tax FAQs
What is the new income tax proposal in Sri Lanka's Budget 2027?
Budget 2027, presented on 12 November 2026, proposes raising the tax-free threshold from Rs. 1,800,000 to Rs. 1,950,000 a year (Rs. 162,500 a month). Income above that would be taxed at 6% on the next Rs. 850,000, then 12%, 18%, 24% and 30% on each next Rs. 600,000, and 36% on the rest. The 12% band is new.
When do the Budget 2027 income tax changes start?
They are proposed to apply from 1 April 2027, the start of the 2027/28 year of assessment. They are not yet law and need Parliament to pass an amendment to the Inland Revenue Act. Until then, the current rates (the 2025/26 tax tables, still in force for 2026/27) continue to apply.
How much less tax will I pay under Budget 2027?
Anyone earning Rs. 162,500 or more a month would pay between Rs. 750 and Rs. 15,750 less tax a month. For example, a Rs. 300,000 monthly salary would be taxed Rs. 13,250 instead of Rs. 18,500. Enter your salary above to see your own figure.
What is the tax-free salary limit in Sri Lanka?
Under the 2025/26 rates, which still apply for 2026/27, the first Rs. 150,000 of monthly salary (Rs. 1,800,000 a year) is tax-free. Budget 2027 proposes raising this to Rs. 162,500 a month (Rs. 1,950,000 a year) from 1 April 2027.
Is APIT the same as PAYE?
Yes, for salaries. APIT (Advance Personal Income Tax) is the income tax your employer deducts from your monthly salary. It replaced the older PAYE system, but many people still call it PAYE.
Is EPF deducted before income tax is worked out?
No. Your 8% EPF contribution does not reduce your taxable income, so PAYE tax is worked out on your full salary.
Disclaimer: This calculator gives an estimate for general information only and is not tax, legal or financial advice.
- It covers regular monthly salary from primary employment for Sri Lankan tax residents, using APIT Table 01. Bonuses, arrears, secondary employment, benefits in kind and other lump-sum payments are not included.
- EPF and ETF are worked out on basic salary plus all allowances. Some allowances may not be liable for EPF and ETF, so your actual figures can differ.
- 2025/26 rates follow the IRD APIT Table 01 under the Inland Revenue (Amendment) Act No. 02 of 2025, in force from 1 April 2025 and still applying for 2026/27.
- Budget 2027 rates are proposals from the Budget Speech of 12 November 2026. They take effect only if Parliament passes the amending law, and the final figures and IRD tables may change.
For your exact deductions, check with your employer or the Inland Revenue Department.
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