Sri Lanka personal tax, explained from zero
1. The one-minute version
If you're an employee in Sri Lanka, three things touch your payslip. APIT (Advance Personal Income Tax) is income tax your employer withholds every month and pays to the Inland Revenue Department (IRD) — people still casually call it PAYE. EPF (Employees' Provident Fund) is retirement savings: 8% comes out of your salary and your employer adds 12% of its own money. ETF (Employees' Trust Fund) is another 3% your employer pays — nothing is deducted from you for ETF.
2. How APIT is calculated (Y/A 2025/26)
The tax year runs 1 April to 31 March. The first Rs 1,800,000 per year (Rs 150,000 per month) of your pay is completely tax-free — this is your "personal relief". Only the amount above that is taxed, in progressive slabs:
"Progressive" means each slab rate applies only to the slice of income inside that slab — earning Rs 300,000 does not mean your whole salary is taxed at 24%. The slab ladder on the calculator tab shows exactly which slices of your pay are taxed at which rate. Since 1 April 2025 the relief was raised from Rs 1.2M to Rs 1.8M and the old 12% slab was removed, so most people pay noticeably less than in 2024.
3. What counts as taxable pay
Not just your basic salary — allowances, overtime, commissions and non-cash benefits all count. A company car (valued at Rs 50,000/month under IRD rules), company housing (12.5% of salary), or bills the company pays for you are added to your taxable pay even though you never see the cash.
4. EPF and ETF in plain terms
EPF: you contribute 8% of your monthly earnings, your employer contributes 12%. Both go into your personal EPF account, which earns interest and is normally withdrawable at retirement (age 55 for men, 50 for women, plus limited special cases). ETF: employer-only, 3%, withdrawable when you change jobs (once per 5 years) or at retirement. When comparing job offers, remember the employer's 15% is real money accruing to you — a Rs 250,000 offer is really a Rs 287,500 cost-to-company package.
5. Interview tips
Always clarify whether a figure quoted to you is gross or take-home, and whether it's basic-only or includes allowances (EPF is often computed on total earnings, and bonuses may be defined as multiples of basic). Use the Reverse tab: decide the take-home you need, and quote the gross that produces it. Ask if any part of the package is a non-cash benefit — it raises your tax without raising your bank deposit.
6. Your paperwork and rights
Your employer must remit the APIT they deduct to the IRD by the 15th of the following month, and give you a T10 certificate after the tax year showing your total pay and tax deducted. Keep it. If your only income is employment income that was fully taxed under APIT, you generally don't need to file a return — but if you have other income (rent, freelance, interest above thresholds) you must register with the IRD and file by 30 November after the year ends.
7. Legal ways to reduce tax
Donations to approved charities and certain government funds are "qualifying payments" — deductible up to the lower of one-third of your assessable income or Rs 75,000 per year (President's Fund donations are not capped). Solar panel installation relief and a few other reliefs appear in budgets from time to time — worth checking the current IRD guidance or the Ask AI tab before filing.
8. Second jobs and freelancing
Income from a second employment is taxed under a separate flat-rate table (Table 07) because your relief is already used at your primary job. Freelance/consulting income isn't under APIT at all — you pay quarterly self-assessment instalments yourself. If that's you, budget roughly your marginal slab rate of every invoice.
Disclaimer: This tool is an educational estimate based on published IRD tables for Y/A 2025/26. It is not tax advice. Payroll edge cases (mid-year joiners, Table 05 cumulative method, terminal benefits) can differ. Confirm significant decisions with the IRD (ird.gov.lk) or a licensed tax practitioner.