Sri Lanka — Personal Income Tax (Individuals) — Skill v1.0

Produced by OpenAccountants (openaccountants.com). Research-grade (tier 2) — drafted from official IRD sources for YA 2025/26, pending sign-off by a Sri Lankan tax practitioner (CA Sri Lanka / IRD-registered). Not tax advice. All output must be reviewed before filing.

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Section 1 — Quick reference

Field	Value
Country	Democratic Socialist Republic of Sri Lanka
Tax	Personal income tax (resident individuals & non-resident citizens)
Currency	LKR (Sri Lankan Rupee) only
Year of assessment (YA)	1 April – 31 March (YA 2025/26 = 1 Apr 2025 – 31 Mar 2026)
Primary legislation	Inland Revenue Act No. 24 of 2017, as amended by the Inland Revenue (Amendment) Act No. 02 of 2025 (certified 20.03.2025), effective 1 April 2025
Tax authority	Inland Revenue Department (IRD), Sri Lanka
Filing portal	IRD e-Services (https://www.ird.gov.lk)
Employer withholding	APIT (Advance Personal Income Tax) — IRD APIT tables for YA 2025/26
Personal relief (tax-free)	LKR 1,800,000 per year (LKR 150,000 per month) — raised from 1,200,000 eff. 1 Apr 2025
Statement of Estimated Tax (SET)	Filed under s.91; YA 2025/26 due 15 August 2025
Validated by	Pending — requires sign-off by a Sri Lankan CA / IRD-registered tax practitioner
Skill version	1.0

Resident individual progressive rates — YA 2025/26 (effective 1 April 2025)

Applies to taxable income after deducting the LKR 1,800,000 personal relief.

Taxable income band (LKR)	Rate on band	Cumulative tax at top of band (LKR)
First 1,000,000	6%	60,000
Next 500,000 (1,000,001 – 1,500,000)	18%	150,000
Next 500,000 (1,500,001 – 2,000,000)	24%	270,000
Next 500,000 (2,000,001 – 2,500,000)	30%	420,000
Balance above 2,500,000	36%	—

Source: Inland Revenue Act No. 24 of 2017 First Schedule (as amended by Act No. 02 of 2025); IRD YA 2025/26 tax chart; IRD Notice PN/IT/2025-01 (26.03.2025).

Personal relief

• LKR 1,800,000 per year for an individual resident in Sri Lanka, or a non-resident but a citizen of Sri Lanka (IRD Notice PN/IT/2025-01).
• Relief does NOT apply to gains from the realisation of investment assets, nor to a person acting as trustee, receiver, executor, or liquidator.
• Non-resident, non-citizen individuals do not receive the relief; their employment tax is treated as a final withholding payment (IRA s.52(2)/(3)).

Conservative defaults

Ambiguity	Default
Residency uncertain	Hard stop — residency drives worldwide vs source-only taxation (verify under IRA)
Relief eligibility unclear (citizenship/residency)	Apply relief only on confirmed resident or non-resident-citizen status
Marginal band borderline	Apply the higher band on the disputed slice
Foreign-currency remote-employment concession (APIT Table 08) claimed	Require evidence of foreign employer + forex remittance; else apply standard rates
Investment-asset gain mixed into employment income	Exclude from relief; capital gains taxed separately at 10% (see CGT)

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Section 2 — Required inputs and refusal catalogue

Required inputs

Minimum viable — (a) confirmation of residency status for the YA; (b) citizenship (drives relief for non-residents); (c) employment vs business/professional income classification; (d) salary certificate / APIT statement (T-10) for employees, or books/bank statements for business income; (e) any WHT/AIT certificates.

Recommended — TIN, prior-year return acknowledgement, APIT deduction statements from each employer, bank interest certificates (AIT deducted), rent records, foreign income + foreign tax certificates.

Refusal catalogue

R-LK-IT-1 — Corporate / company return. Companies file under the corporate regime (30% standard). Out of scope — use sri-lanka-corporate-tax.

R-LK-IT-2 — Withholding / AIT computation for a payer. Payer-side WHT/AIT deduction and remittance is a separate regime — use sri-lanka-withholding-tax.

R-LK-IT-3 — Capital gains. Gains on realisation of investment assets are taxed at a separate flat 10% and excluded from the progressive bands and from personal relief. This skill states the headline rate only; escalate detailed CGT computations.

R-LK-IT-4 — SSCL / VAT. Turnover-based levies are separate — use sri-lanka-sscl and sri-lanka-vat.

R-LK-IT-5 — Non-resident with treaty position. Dual residence, mid-year migration, or non-resident with mixed-source income requires treaty analysis. Out of scope — escalate to a Sri Lankan tax practitioner.

R-LK-IT-6 — Residency day-count determination. Resident-status determination under the IRA residency tests must be confirmed by the practitioner (the precise day-count test is NOT asserted in this skill — VERIFY against IRA s.69 and current IRD guidance).

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Section 3 — Tier 1 rules: rates, relief, APIT

3.1 Charge and year of assessment

Income tax is charged under the Inland Revenue Act No. 24 of 2017 (as amended). The year of assessment runs 1 April to 31 March. Residents are taxed on worldwide income; non-residents on Sri Lanka-source income (confirm residency and source rules with the practitioner).

3.2 Progressive rates and relief

Apply the LKR 1,800,000 personal relief first (where eligible — see Section 1), then the 6%/18%/24%/30%/36% bands in the Section 1 table. These rates and the relief took effect 1 April 2025 under the Inland Revenue (Amendment) Act No. 02 of 2025.

3.3 APIT (Advance Personal Income Tax / PAYE) — employer withholding

The IRD publishes APIT tables for YA 2025/26 (eight tables, effective 1 April 2025) that employers use to deduct tax at source. The three core tables:

APIT Table 01 — Monthly tax on regular profits from primary employment. Personal relief of LKR 150,000/month is built in. Monthly deduction:

Monthly regular profit (LKR)	Tax
Up to 150,000	Relief from tax (nil)
150,001 – 233,333	6% of profit − 9,000
233,334 – 275,000	18% of profit − 37,000
275,001 – 316,667	24% of profit − 53,500
316,668 – 358,333	30% of profit − 72,500
Over 358,333	36% of profit − 94,000

When cumulative profits exceed LKR 1,800,000 for low-monthly-income employees, Table No. 05 is applied. Source: IRD APIT 2025/26 Table 01.

APIT Table 02 — Lump-sum payments. Let D = estimated gross aggregate remuneration (EGAR) for the year. If D ≤ 1,800,000, deduction is nil. Above that:

EGAR band D (LKR)	Tax on lump sum
1,800,001 – 2,800,000	D × 6% − 108,000
2,800,001 – 3,300,000	D × 18% − 444,000
3,300,001 – 3,800,000	D × 24% − 642,000
3,800,001 – 4,300,000	D × 30% − 870,000
Above 4,300,000	D × 36% − 1,128,000

Source: IRD APIT 2025/26 Table 02.

APIT Table 08 — Resident employees working in Sri Lanka for a foreign employer (foreign-currency remittances). Concessionary two-bracket schedule on cumulative employment income:

Cumulative employment income (LKR)	Tax
Up to 1,800,000	Relief from tax (nil)
1,800,001 – 2,800,000	6% − 108,000
Over 2,800,000	15% − 360,000

Applies under IRA s.86(4)/83A to resident employees of foreign employers paid in foreign currency. Source: IRD APIT 2025/26 Table 08.

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Section 4 — Tier 2: classification, foreign income, reliefs

• Salary vs business/professional income. Employment income is taxed via APIT at source; business/professional income is self-assessed in the annual return and via the SET (estimated tax). Independent professional service fees over LKR 100,000/month also attract 5% AIT at source (see sri-lanka-withholding-tax).
• Foreign-currency remote workers. A resident physically in Sri Lanka working for a foreign employer and remitting foreign currency through a Sri Lankan bank uses the concessionary APIT Table 08 (top marginal 15%, not 36%). Require evidence of the foreign employer and the forex remittance.
• Investment-asset gains. Taxed at a flat 10% capital gains rate, separate from the progressive bands; personal relief does not apply.
• Foreign income & double-tax relief. Residents are taxed on worldwide income; foreign tax credit / treaty relief may apply — VERIFY the treaty position with the practitioner (not asserted here).

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Section 5 — Worked example (illustrative — confirm against current APIT tables)

Facts. Nimal, resident Sri Lankan employee, single primary employment, gross employment income LKR 4,200,000 for YA 2025/26. No other income.

Step	LKR
Gross employment income	4,200,000
Less: personal relief	(1,800,000)
Taxable income	2,400,000
Tax: first 1,000,000 @ 6%	60,000
Next 500,000 @ 18%	90,000
Next 500,000 @ 24%	120,000
Next 400,000 (to 2,400,000) @ 30%	120,000
Total tax	390,000

In practice the employer deducts this monthly via APIT Table 01. Reconcile APIT deducted against the annual liability in the return.

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Section 6 — Filing and payment

• Year of assessment: 1 April – 31 March.
• Statement of Estimated Tax Payable (SET): filed under IRA s.91; YA 2025/26 due 15 August 2025.
• Annual return of income: filed via IRD e-Services. (Exact individual return due date and quarterly self-assessment instalment dates — VERIFY against current IRD calendar; not asserted here.)
• APIT: employer deducts monthly and remits to IRD; employee reconciles in the annual return.

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Section 7 — Conservative defaults

Situation	Default	Rationale
Relief eligibility unconfirmed	Do not apply relief until residency/citizenship confirmed	Avoid under-assessment
Marginal band borderline	Apply higher band	Cannot under-assess
Table 08 concession claimed without forex evidence	Apply standard APIT Table 01	Affirmative evidence required
Capital gain mixed into income	Exclude from relief; tax at 10% separately	Statutory separation
Any figure flagged VERIFY	Flag for reviewer; do not finalise	Research-grade content

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Section 8 — Sources

All figures anchored to official IRD primary sources for YA 2025/26 (verified by deep research, 2026-06):

1. IRD YA 2025/26 tax chart — https://www.ird.gov.lk/en/publications/SitePages/tax_chart_2526.aspx
2. IRD Notice PN/IT/2025-01 (26.03.2025) — https://www.ird.gov.lk/en/Lists/Latest%20News%20%20Notices/Attachments/666/PN_IT_2025-01_26032025_E.pdf
3. IRD APIT tables YA 2025/26 (Tables 01, 02, 08 + Guideline) — https://www.ird.gov.lk/en/publications/sitepages/apit_tax_tables.aspx
4. Consolidated Inland Revenue Act No. 24 of 2017 (to 2025 changes) — https://www.ird.gov.lk/en/publications/Acts_Income%20Tax_2017/IRA_Cons_Act_-_2025_Changes.pdf
5. SET YA 2025/26 form (s.91) — https://www.ird.gov.lk/en/Downloads/IT_SET_Doc/SET_2025_2026_E.pdf

Known gaps / VERIFY items: residency day-count test (IRA s.69); individual annual-return due date and quarterly instalment dates; treaty / foreign-tax-credit mechanics. These are flagged in-line and were not asserted from the research.

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Prohibitions

• NEVER apply the personal relief to a non-resident non-citizen, or to investment-asset gains.
• NEVER use pre-2025 figures (relief LKR 1,200,000, or old bands) for YA 2025/26 — the Amendment Act No. 02 of 2025 changed them effective 1 April 2025.
• NEVER apply the APIT Table 08 concession (top 15%) without evidence of a foreign employer and foreign-currency remittance.
• NEVER assert a residency day-count, an individual return due date, or treaty relief that this skill flags as VERIFY — flag for the reviewer.
• NEVER file or instruct filing — produce a working paper for review by a Sri Lankan CA / IRD-registered practitioner.

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Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes. All outputs must be reviewed and signed off by a qualified Sri Lankan professional (Chartered Accountant / IRD-registered tax practitioner) before filing or acting upon. The most up-to-date, verified version is maintained at openaccountants.com.

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