Tax Calculator Sri Lanka 2026
Calculate your income tax with current brackets and reliefs
Quick Answer
First LKR 100,000 monthly tax-free. Rates: 6% (100K-150K), 12% (150K-200K), 18% (200K-250K), 24% (250K-300K), 30% (300K-500K), 36% (above 500K). EPF contribution (8%) tax deductible. PAYE deducted monthly by employer. Annual tax return may be required for high earners.
Income Tax Brackets 2026
| Monthly Taxable Income (LKR) | Tax Rate | Tax Amount |
|---|---|---|
| 0 - 100,000 | 0% | 0 |
| 100,001 - 150,000 | 6% | 6,000 max |
| 150,001 - 200,000 | 12% | 12,000 max |
| 200,001 - 250,000 | 18% | 21,000 max |
| 250,001 - 300,000 | 24% | 33,000 max |
| 300,001 - 500,000 | 30% | 93,000 max |
| Above 500,000 | 36% | 36% on excess |
Sample Tax Calculations
| Gross Salary (LKR) | Monthly Tax (LKR) | Annual Tax (LKR) | Net Monthly (LKR) |
|---|---|---|---|
| 200,000 | 9,120 | 109,440 | 174,880 |
| 300,000 | 32,880 | 394,560 | 243,120 |
| 500,000 | 81,000 | 972,000 | 379,000 |
| 1,000,000 | 261,000 | 3,132,000 | 699,000 |
Frequently Asked Questions
What is the income tax rate in Sri Lanka?
Sri Lanka income tax rates 2026: 0% for first LKR 100,000 monthly, 6% for LKR 100,001-150,000, 12% for LKR 150,001-200,000, 18% for LKR 200,001-250,000, 24% for LKR 250,001-300,000, 30% for LKR 300,001-500,000, 36% above LKR 500,000 monthly. Annual tax: First LKR 1.2 million tax-free. Progressive tax based on income level. Employment income (PAYE) withheld at source.
How is PAYE tax calculated in Sri Lanka?
PAYE (Pay As You Earn) tax calculation: Gross salary minus EPF (8%), minus allowable deductions, Apply tax brackets to taxable income, Tax calculated monthly, Deducted by employer before payment. Example: LKR 200,000 salary: EPF LKR 16,000, Taxable LKR 184,000, Tax LKR 10,080 (6% on 84,000). Employer remits tax to Inland Revenue. Annual reconciliation at year-end.
What is the tax-free allowance in Sri Lanka?
Sri Lanka tax-free allowance: First LKR 1,200,000 per year (LKR 100,000 monthly). Resident individuals only. Non-residents taxed from first rupee. EPF contribution deductible from taxable income. Tax relief threshold may change annually. Check latest budget announcements. Self-employed have same threshold but different deduction rules.
How much tax on LKR 200,000 salary?
Tax calculation for LKR 200,000 monthly: Less EPF (8%): LKR 16,000, Taxable income: LKR 184,000, Tax brackets: LKR 84,000 at 6% = LKR 5,040, LKR 34,000 at 12% = LKR 4,080, Total monthly tax: LKR 9,120, Annual tax: LKR 109,440. Net salary after tax: LKR 174,880. Actual tax may vary based on deductions and reliefs claimed.
What deductions can I claim for tax?
Tax deductible expenses in Sri Lanka: EPF contributions (8%), Investment in approved shares (up to limit), Housing loan interest (up to limit), Medical insurance premiums, Donations to approved charities, Life insurance premiums. Claim deductions through employer or annual return. Keep receipts and proof. Maximum deduction limits apply. Self-employed have more deduction options.
Do I need to file tax return?
Tax return filing in Sri Lanka: Employees with PAYE: Not required if only employment income, Required if total income above LKR 1.2 million AND additional income sources, Self-employed: Must file annual return, Business owners: Must file, Deadline: November 30 following tax year. File online at IRD portal. Penalty for late filing: LKR 5,000 and interest. Employers issue tax assessment certificate.
What is the tax on LKR 500,000 salary?
Tax calculation for LKR 500,000 salary: Less EPF: LKR 40,000, Taxable: LKR 460,000, Tax: LKR 0 on first 100,000, LKR 3,000 (6% on 50,000), LKR 6,000 (12% on 50,000), LKR 9,000 (18% on 50,000), LKR 12,000 (24% on 50,000), LKR 15,000 (30% on 50,000), LKR 36,000 (36% on 100,000), Total monthly tax: LKR 81,000, Annual tax: LKR 972,000. High earners taxed significantly.
How to reduce tax liability legally?
Legal tax reduction methods: Maximize EPF contribution, Deduct allowable expenses, Invest in tax-advantaged instruments, Claim medical insurance deduction, Use housing loan interest deduction, Donate to approved charities, Check for all available reliefs, File returns on time to avoid penalties. Proper tax planning saves 5-15%. Consult tax advisor for complex situations. Avoid illegal tax evasion. Keep documentation for all claims.
What is the penalty for late tax payment?
Tax penalty in Sri Lanka: Late filing penalty: LKR 5,000, Late payment: 1.5% per month on outstanding tax, Maximum: 50% of tax due, Interest on unpaid tax, Additional penalties for willful default. PAYE under-deduction by employer: Employee liable. Tax audit findings: Additional tax + penalty. File on time to avoid issues. IRD can waive penalties in genuine hardship cases.
Is EPF contribution tax deductible?
Yes, EPF contribution fully tax deductible. Employee EPF contribution (8%) deducted from taxable income. Reduces tax liability. Example: LKR 200,000 salary, EPF LKR 16,000 deducted, Tax calculated on LKR 184,000. EPF deduction capped at 12% for tax purposes (employee + employer). Contributions above limit not additional deduction. EPF provides double benefit: tax deduction + tax-free returns + retirement savings.
How does tax relief work for employees?
Tax relief for Sri Lankan employees: Tax-free threshold: LKR 100,000 monthly, Employment income deduction: Standard allowance, EPF deduction: Employee contribution deductible, Insurance premium relief: Up to LKR 100,000 annual, Housing loan interest relief: Up to LKR 300,000 annual. Relief reduces tax payable. Claim through employer PAYE system. Keep documentation. Annual adjustment possible through tax return filing.
When is tax year in Sri Lanka?
Sri Lanka tax year: April 1 to March 31 (financial year). Same as government fiscal year. PAYE deducted monthly. Annual assessment by end of tax year. Tax return deadline: November 30 following year-end. Employers issue tax statement (T10) by May 31. File returns through IRD online portal. Keep records for 5 years. Tax year aligns with company financial years for most businesses.