Sri Lanka Individual Tax Changes 2025: New APIT Slabs and Examples
During a speech to Parliament on December 18, 2024, President Anura Kumara Dissanayake announced major changes to the country’s tax system. These changes are designed to improve how the government collects revenue, make taxes easier to understand, and help the economy recover, in line with the International Monetary Fund (IMF) support program.
The new tax changes will affect both individuals and businesses in various ways. While some changes bring positive outcomes, others may pose challenges. If you are a salaried employee, you may be particularly concerned about the change to your monthly APIT (formerly PAYE) tax deduction from your salary.
In this blog, we focus on the impact on individual tax calculation, helping you understand how these adjustments might influence your monthly tax.
Increase in Tax-Free Allowance and Revised Tax Slabs
The proposed changes aim to provide better financial relief, especially for low and middle income individuals:
| Current Taxation | Proposed Taxation (Effective April 1, 2025) | |
|---|---|---|
| Tax-Free Allowance | The monthly tax-free allowance is set at LKR 100,000 (LKR 1.2 million annually). | The allowance will increase to LKR 150,000 per month (LKR 1.8 million annually). |
| Tax Slabs | After the tax free allowance, five slabs each amounting to LKR 500,000, taxed at 6%, 12%, 18%, 24%, and 30% respectively. The balance is taxed at 36%. | After the tax free allowance, a 6% tax rate will apply to the next LKR 1,000,000. After, three slabs each amounting to LKR 500,000, will be taxed at 18%, 24%, and 30% respectively. The balance is taxed at 36%. (No slab to be taxed at 12%). |
New Tax Slabs Table with Rates (Proposed Effective from April 1, 2025)
| Tax Rate | Amount in LKR (Annually) | Amount in LKR (Monthly) |
|---|---|---|
| 0% | The first 1,800,000 is tax free. | The first 150,000 is tax free. |
| 6% | From 1,800,000 to 2,800,000 | From 150,000 to 233,333.33 |
| 18% | From 2,800,000 to 3,300,000 | From 233,333.33 to 275,000 |
| 24% | From 3,300,000 to 3,800,000 | From 275,000 to 316,666.66 |
| 30% | From 3,800,000 to 4,300,000 | From 316,666.66 to 358,333.33 |
| 36% | Amount exceeding 4,300,000 | Amount exceeding 358,333.33 |
Tax Saving at Each Income Level with New Changes
| Total Monthly Income (LKR) | Current Tax Per Month (LKR) | New Tax Per Month (LKR) | Tax Saving Per Month (LKR) |
|---|---|---|---|
| 100,000 | - | - | - |
| 150,000 | 3,500 | - | 3,500 |
| 200,000 | 10,500 | 3,000 | 7,500 |
| 500,000 | 106,500 | 86,000 | 20,500 |
| 1,000,000 | 286,500 | 266,000 | 20,500 |
Tax Calculator - Find Your Tax Saving
Enter your monthly income to see how much you can save with the new tax proposals using our tax calculator.
| Your total monthly income | LKR 0 |
| Your total annual income | LKR 0 |
| Total tax under old method (month) | LKR 0 |
| Total tax under new method (month) | LKR 0 |
| Total tax under old method (year) | LKR 0 |
| Total tax under new method (year) | LKR 0 |
| Tax saving per month | LKR 0 |
| Tax saving per year | LKR 0 |
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