Government proposes raising monthly tax-free income threshold to Rs. 200,000
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The Sri Lankan government has proposed raising the monthly tax-free income threshold from Rs. 150,000 to Rs. 200,000 as state revenue improves, with design and timing still under discussion.
This follows an April 2025 increase in annual personal tax relief from Rs. 1.2 million to Rs. 1.8 million, alongside the widening of the first taxable band.
Inland Revenue Department data for 2024/25 showed that 75.6% of approximately 2.55 million registered employees had no tax deducted. Only 622,419 employees paid tax, contributing an average of about Rs. 308,000 each.
Between late 2024 and late 2025, registered income taxpayers increased by 19% to about 1.3 million, while registered value-added tax payers rose from 21,227 to 33,187.
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How the story developed
- EThis storyThe Inland Revenue Department reported that most registered employees currently pay no income tax.
- EThe government announced plans to raise the monthly tax-free threshold to Rs. 200,000.
