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Sri Lanka’s new personal income tax structure reduces tax burden across income groups
In his recent address to Parliament, the President announced proposed reforms to Sri Lanka’s Personal Income Tax (PIT) system. These changes include raising the tax-free monthly income threshold from LKR 100,000 to LKR 150,000, as well as adjusting the tax brackets to offer substantial savings for taxpayers. At the same time, these proposals reinforce Sri Lanka’s position as one of the region’s least taxed countries for lower-income earners. Although the President did not outline the precise tax rates for each bracket, PublicFinance.lk has estimated the new rates and brackets based on the proposed reductions upto LKR 300,000 per month. Exhibit 1 below summarises these revised tax brackets and corresponding rates. Exhibit 1: Revised tax brackets and corresponding rates Monthly Income Current Slabs Proposed Slabs Tax Rate (%) Lower Boundary Upper Boundary Lower Boundary Upper Boundary Up to 100,000 Up to 150,000 0% 100,000 141,667 150,000 233,333 6% 141,667 183,333 12% 183,333 225,000 233,333 275,000 18% 225,000 266,667 275,000 316,667 24% Sources: Inland Revenue Department of Sri Lanka, President’s Media Division Sri Lanka already provides the highest tax-free threshold and a comparatively lower tax burden for low-income earners than most other South Asian countries, with the exception of the Maldives. In a previous blog, PublicFinance.lk noted that Sri Lanka’s current tax-free income threshold of LKR 100,000 per month is higher than those in Bangladesh (LKR 75,682), Pakistan (LKR 54,710), and India and Bhutan (approximately LKR 91,000). However, while income earners below LKR 250,000 per month enjoy relatively low tax obligations, the burden beyond this amount rises sharply to the highest in the region.
Featured Insight
Sri Lanka’s new personal income tax structure reduces tax burden across income groups
In his recent address to Parliament, the President announced proposed reforms to Sri Lanka’s Personal Income Tax (PIT) system. These changes include raising the tax-free monthly income threshold from LKR 100,000 to LKR 150,000, as well as adjusting the tax brackets to offer substantial savings for taxpayers. At the same time, these proposals reinforce Sri Lanka’s position as one of the region’s least taxed countries for lower-income earners. Although the President did not outline the precise tax rates for each bracket, PublicFinance.lk has estimated the new rates and brackets based on the proposed reductions upto LKR 300,000 per month. Exhibit 1 below summarises these revised tax brackets and corresponding rates. Exhibit 1: Revised tax brackets and corresponding rates Monthly Income Current Slabs Proposed Slabs Tax Rate (%) Lower Boundary Upper Boundary Lower Boundary Upper Boundary Up to 100,000 Up to 150,000 0% 100,000 141,667 150,000 233,333 6% 141,667 183,333 12% 183,333 225,000 233,333 275,000 18% 225,000 266,667 275,000 316,667 24% Sources: Inland Revenue Department of Sri Lanka, President’s Media Division Sri Lanka already provides the highest tax-free threshold and a comparatively lower tax burden for low-income earners than most other South Asian countries, with the exception of the Maldives. In a previous blog, PublicFinance.lk noted that Sri Lanka’s current tax-free income threshold of LKR 100,000 per month is higher than those in Bangladesh (LKR 75,682), Pakistan (LKR 54,710), and India and Bhutan (approximately LKR 91,000). However, while income earners below LKR 250,000 per month enjoy relatively low tax obligations, the burden beyond this amount rises sharply to the highest in the region.
Featured Insight
Sri Lanka’s new personal income tax structure reduces tax burden across income groups
In his recent address to Parliament, the President announced proposed reforms to Sri Lanka’s Personal Income Tax (PIT) system. These changes include raising the tax-free monthly income threshold from LKR 100,000 to LKR 150,000, as well as adjusting the tax brackets to offer substantial savings for taxpayers. At the same time, these proposals reinforce Sri Lanka’s position as one of the region’s least taxed countries for lower-income earners. Although the President did not outline the precise tax rates for each bracket, PublicFinance.lk has estimated the new rates and brackets based on the proposed reductions upto LKR 300,000 per month. Exhibit 1 below summarises these revised tax brackets and corresponding rates. Exhibit 1: Revised tax brackets and corresponding rates Monthly Income Current Slabs Proposed Slabs Tax Rate (%) Lower Boundary Upper Boundary Lower Boundary Upper Boundary Up to 100,000 Up to 150,000 0% 100,000 141,667 150,000 233,333 6% 141,667 183,333 12% 183,333 225,000 233,333 275,000 18% 225,000 266,667 275,000 316,667 24% Sources: Inland Revenue Department of Sri Lanka, President’s Media Division Sri Lanka already provides the highest tax-free threshold and a comparatively lower tax burden for low-income earners than most other South Asian countries, with the exception of the Maldives. In a previous blog, PublicFinance.lk noted that Sri Lanka’s current tax-free income threshold of LKR 100,000 per month is higher than those in Bangladesh (LKR 75,682), Pakistan (LKR 54,710), and India and Bhutan (approximately LKR 91,000). However, while income earners below LKR 250,000 per month enjoy relatively low tax obligations, the burden beyond this amount rises sharply to the highest in the region.
Featured Insight
Sri Lanka’s new personal income tax structure reduces tax burden across income groups
In his recent address to Parliament, the President announced proposed reforms to Sri Lanka’s Personal Income Tax (PIT) system. These changes include raising the tax-free monthly income threshold from LKR 100,000 to LKR 150,000, as well as adjusting the tax brackets to offer substantial savings for taxpayers. At the same time, these proposals reinforce Sri Lanka’s position as one of the region’s least taxed countries for lower-income earners. Although the President did not outline the precise tax rates for each bracket, PublicFinance.lk has estimated the new rates and brackets based on the proposed reductions upto LKR 300,000 per month. Exhibit 1 below summarises these revised tax brackets and corresponding rates. Exhibit 1: Revised tax brackets and corresponding rates Monthly Income Current Slabs Proposed Slabs Tax Rate (%) Lower Boundary Upper Boundary Lower Boundary Upper Boundary Up to 100,000 Up to 150,000 0% 100,000 141,667 150,000 233,333 6% 141,667 183,333 12% 183,333 225,000 233,333 275,000 18% 225,000 266,667 275,000 316,667 24% Sources: Inland Revenue Department of Sri Lanka, President’s Media Division Sri Lanka already provides the highest tax-free threshold and a comparatively lower tax burden for low-income earners than most other South Asian countries, with the exception of the Maldives. In a previous blog, PublicFinance.lk noted that Sri Lanka’s current tax-free income threshold of LKR 100,000 per month is higher than those in Bangladesh (LKR 75,682), Pakistan (LKR 54,710), and India and Bhutan (approximately LKR 91,000). However, while income earners below LKR 250,000 per month enjoy relatively low tax obligations, the burden beyond this amount rises sharply to the highest in the region.
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Energy and Water Supply
Recent trends and developments in public finance issues relating to energy and water supply.
May fuel price update: Petrol aligned with formula, diesel still priced above
In May 2025, the prices of both Petrol 92 and Auto Diesel were reduced in Sri Lanka. Petrol 92 dropped by LKR 6 per litre, while Auto Diesel saw a more significant cut of LKR 12 per litre. This marks the fourth consecutive month in which the...
From The PF Wire
Source:
Daily Mirror
Sri Lanka to restructure US $ 800mn water debt
Sri Lanka, with World Bank support, will restructure $800 million in water sector debt and access credit enhancement schemes to ensure transparent, affordable new water projects, aligning with SDG6, according to Minister Jeevan Thondaman.
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Source:
Daily Mirror
CEB to reduce electricity tariff rates by 18 perce...
The Ceylon Electricity Board (CEB) plans to reduce electricity tariffs by 18 percent, attributing the possibility of this reduction mainly to the increased contribution of hydropower to Sri Lanka's energy mix, thanks to recent sufficient rainfall that enhanced the power generation capacity of...
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Source:
Daily Mirror
Fuel Prices Slashed
A litre of petrol (92) would be reduced by Rs. 60 and petrol (95) by Rs. 135 from midnight today, Power and Energy Minister Kanchana Wijesekara said today. https://www.dailymirror.lk/top_story/Fuel-prices...
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Insight on Energy and Water Supply
Petrol and Diesel vs. fuel price formula...
Following the monthly fuel price revision...
Where do 92 Octane and Auto Diesel stand...
On 31 May 2024, fuel prices in Sri Lanka...
Electricity Bills in Sri Lanka: Highest...
Sri Lankans pay 2.5 to 3 times mo...
Change in Tariffs on Monthly Electricity...
Electricity tariffs were initially revise...
Financial Performance of Sri Lanka’s Nat...
The below figure illustrates how Sri Lanka has performed at providin...
A closer look into the Ceylon Electricit...
The electricity sector in Sri Lanka is la...
Prices of Fuel Across Regional Emerging...
The prices of 92 Octane petrol has remain...
The Retail Price of Petrol and Diesel in...
92 Octane petrol
Expenditure on the Energy & Water Supply...
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Featured
Will the budget's veil of secrecy be lifted in 202...
The lack of transparency on the implementation progress of proposals in budget speeches has increased sharply in 2022 and 2023, according to a systematic evaluation conducted by Verité Research.
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WHT and PAYE had the largest growth in Q3 2023
The Fiscal Management Report 2024, recently released by the Ministry of Finance, offers a comprehensive analysis of the government's revenue streams. A notable highlight from the report is the remarkable growth in revenue from two key co...
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May fuel price update: Petrol aligned with formula...
In May 2025, the prices of both Petrol 92 and Auto Diesel were reduced in Sri Lanka. Petrol 92 dropped by LKR 6 per litre, while Auto Diesel saw a more significant cut of LKR 12 per litre. This marks the fourth consecutive month in which the...
Read More
