Personal Income Tax in Sri Lanka has undergone key updates for the 2025 assessment year. For employees, the Advance Personal Income Tax (APIT) system remains central to compliance, impacting monthly salaries, bonuses, and other taxable benefits. Understanding APIT is essential for both employers and individuals to avoid penalties and ensure smooth tax filing.
What is APIT in Sri Lanka?
The Advance Personal Income Tax (APIT) is the system for collecting income tax on employment earnings in Sri Lanka. Previously known as PAYE (Pay-As-You-Earn), APIT ensures tax is deducted at source from your monthly salary or wages before it reaches you. This makes tax compliance easier and reduces year-end surprises.
Key points about APIT:
- Deducted directly by the employer monthly
- Applicable to all resident individuals earning above the tax-free threshold
- Covers salaries, bonuses, overtime, and other employment benefits
- Remitted to the IRD Sri Lanka.
2025/26 Income Tax Rates for Individuals (Residents & non‑residents)
Annual tax slabs (Sri Lanka tax brackets)
- First LKR 1,800,000: 0%
- Next LKR 1,000,000: 6%
- Next LKR 500,000: 12%
- Next LKR 500,000: 18%
- Next LKR 500,000: 24%
- Next LKR 500,000: 30%
- Remainder: 36%
Monthly equivalents (for payroll/APIT)
- First 150,000 → 0%
- 150,001 – 233,333 → 6%
- 233,334 – 275,000 → 12%
- 275,001 – 316,666 → 18%
- 316,667 – 358,333 → 24%
- 358,334 – 400,000 → 30%
- 400,001 and above → 36%
These monthly bands are how the APIT tables are built. Final liability is always settled in the Income Tax Return after the year‑end.
The 8 APIT Tax Tables (When to use what)
Here’s an overview of the 8 APIT Tax Tables applicable from April 1, 2025. The correct table should be selected based on the employee’s source of income and specific employment category.
Have access to the APIT tables: Click Here
| Table | When it applies | Who | What it covers | Example |
| Table 01 | Regular monthly salary when a primary employment declaration(PED) is on file | Resident employees & non‑resident citizens | Basic pay + taxable allowances/benefits paid for the month | Single job, PED submitted → use Table 01 every month |
| Table 02 | Lump‑sum payments made in a month | Same as Table 01 | Bonuses, leave encashment, arrears/back‑pay paid as a lump sum | Annual bonus paid in June → use Table 02 for that bonus |
| Table 03 | Once‑and‑for‑all (terminal) payments | Any employee | Retiring gratuity, compensation for loss of office, and similar terminal amounts | Retirement package on exit → use Table 03 |
| Table 04 | Employment income of non‑resident, non‑citizen employees | Non‑resident, non‑citizen | Regular pay and lump sums from Sri Lankan employment | Expat on short‑term contract → use Table 04 |
| Table 05 | When cumulative taxable income for the Y/A exceeds 1.8M due to higher pay in some months (annualised method) | Employees with primary employment declared | Ensures correct tax when income fluctuates across months | Sales staff with variable commissions → switch to Table 05 in months that tip the cumulative over 1.8M |
| Table 06 | Tax‑on‑tax (gross‑up) cases where the employer bears the tax | Anyone with net‑of‑tax agreements | Calculates grossed‑up APIT | CEO package agreed net of tax → use Table 06 |
| Table 07 | If no primary employment declaration is furnished, or the employee has more than one employer concurrently | Such employees | Higher withholding to avoid under‑deduction | New joiner without declaration yet; or second job → use Table 07 until PED is filed |
| Table 08 | Employee works for a foreign employer while physically in Sri Lanka, so the employer cannot deduct APIT | Resident individuals in SL (remote workers) | Self‑pay APIT by the 15th of the next month | Remote software engineer paid by an overseas company → use Table 08 (self‑remit) |
Tip: If you change jobs mid‑year or your pay spikes (bonus/arrears), payroll should review Table 05 so your Sri Lanka tax on salary stays accurate during the year.
Calculating APIT in Sri Lanka
To calculate your APIT:
- Determine your gross monthly income
- Apply the monthly tax-free allowance (LKR 150,000)
- Deduct the tax according to the tax slabs in Sri Lanka
- For bonuses or lump sums, apply the corresponding APIT table from IRD
Individuals can also use the Sri Lanka Tax Calculator for faster and accurate calculations.
Employer obligations PAYE/APIT compliance
- Deduct APIT from gains & profits from employment at the time of payment.
- Remit the tax to IRD by the 15th of the following month (earlier if the 15th is a holiday/weekend).
- Issue T‑10 certificate to each employee by 30 April following the Y/A (or within 30 days of termination).
- File APIT annual statement by 30 April.
- Keep track of primary employment declarations, secondary jobs, and gross‑up cases.
AIT on bank interest (separate from APIT)
From 1 April 2025, Advance Income Tax (AIT) of 10% applies on interest/discounts from Sri Lankan deposits. If a resident individual’s assessable income for the year does not exceed LKR 1.8M, they can submit a self‑declaration to their bank/finance company to relieve AIT at source. (This is not APIT, but it affects your Income Tax Return.)
Filing Income Tax Return for Individuals
- Who is liable? Residents are taxed on global income (with specific concessions), non‑residents on Sri Lanka‑source income.
- How to file: Register for Online TIN Registration Sri Lanka, log in to Income Tax Login, and submit your Sri Lanka Tax Return via IRD e‑Services.
- Set‑off: APIT and AIT credits appear in RAMIS and are set off against your annual Personal Income Tax Sri Lanka liability.
Learn more about Tax Returns: Income Tax in Sri Lanka 2025
Need help? TaxPro can handle your Sri Lanka tax registration, APIT setup, and Income Tax Return Sri Lanka filing end‑to‑end.