Income Tax Guide

✅ Required to Pay

• Annual income exceeds Rs. 1,800,000 • Resident individuals (in SL 183+ days) • Non-resident citizens of Sri Lanka • Income from employment, business, investment, rent • Foreign income remitted to SL (NEW — exemptions removed!)

📝 Required to Register (TIN)

• ALL Sri Lankan adults aged 18+ • Even if you have NO income • Mandatory since January 1, 2024 • Penalty up to Rs. 50,000 for non-registration • Required for many financial/government services

❌ Not Liable to Pay

• Annual income below Rs. 1,800,000 • Still need TIN, but tax = Rs. 0 • Submit Self-Declaration Form to bank to avoid 10% WHT on interest

💰 Personal Relief: Rs. 1.2M → Rs. 1.8M

50% increase! Significant tax relief for middle-income earners.

📊 New Tax Slabs

Restructured to 5 progressive slabs from 6% to 36%.

🌍 Service Exports: 15% Cap

Income from services rendered outside SL (paid in foreign currency, remitted via bank) capped at 15% — major win for IT/freelancers.

🚫 Foreign Income Exemptions REMOVED

Effective 1 April 2025, foreign source income is taxable. The 0% exemption is GONE — but capped at 15%.

🏦 Bank Interest WHT

10% Advance Income Tax (AIT) on interest. Submit Self-Declaration if not liable to tax.

💸 Refund Process Improved

Refunds up to Rs. 180,000 processed in 3 months. Senior citizens get quarterly refunds (under Rs. 45,000).

🎰 Restricted Industries: 45%

Betting, gaming, liquor, tobacco manufacturing/import all taxed at flat 45%.

📤 APIT Replaces PAYE

Advance Personal Income Tax is now the system for employer withholding.

💼 Employment Income

Salary, bonus, allowances, benefits in kind, commissions

📌 Subject to APIT (employer withholds monthly)

🏢 Business Income

Profits from sole proprietorship, partnership, professional practice

📌 Quarterly tax payments + annual return

🏠 Investment Income

Dividends, capital gains, royalties, interest

📌 WHT/AIT deducted at source

🏘️ Rental Income

Rent from immovable property

📌 Net of allowed deductions

🌍 Foreign Income

Income earned abroad (NEW: now taxable)

📌 15% max if remitted via bank

📦 Other Income

Gambling winnings, gifts, miscellaneous

📌 Various rates apply