The 2025/2026 tax year has started (1 April 2025 to 31 March 2026), and with it come new tax rates and a higher tax-free allowance. Whether you’re a salaried employee, self-employed professional, or business owner, here’s everything you need to know.

What Changed From 1 April 2025?

The most important change: your tax-free allowance has increased to Rs. 1,800,000 per year (Rs. 150,000 per month). If your annual income is below this threshold, you don’t pay any income tax.

New Income Tax Brackets for 2025/2026

Here are the progressive tax rates for individuals:

Taxable Income Slab (Rs.)	Tax Rate
First 1,800,000	0% (Tax Free)
Next 500,000	6%
Next 500,000	12%
Next 500,000	18%
Next 500,000	24%
Next 500,000	30%
Balance exceeding 4,800,000	36%

Example: Monthly Salary of Rs. 250,000

Let’s calculate the tax for someone earning Rs. 250,000 per month (Rs. 3,000,000 annually):

• Annual income: Rs. 3,000,000
• Less personal relief: Rs. 1,800,000
• Taxable income: Rs. 1,200,000

Tax calculation:

• First Rs. 500,000 at 6% = Rs. 30,000
• Next Rs. 500,000 at 12% = Rs. 60,000
• Remaining Rs. 200,000 at 18% = Rs. 36,000
• Total annual tax: Rs. 126,000
• Monthly tax: Rs. 10,500

Don’t want to calculate manually? Use our free calculator:

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Do Salaried Employees Need to File a Tax Return?

Yes. From assessment year 2023/2024, all individuals must file electronically. Even if your employer deducts APIT (Advance Personal Income Tax) from your salary, you still need to file a return of income by 30 November 2026.

The only exception: Senior citizens (65+) can file returns in writing instead of electronically from the 2025/2026 assessment year.

What If Your Employer Already Deducts APIT?

APIT is an advance payment — not the final tax. When you file your return:

• If the APIT deducted was more than your actual tax liability, you get a refund
• If it was less, you need to pay the balance

Many employees discover they’ve overpaid once they claim all eligible deductions. It’s worth filing to check.

Deductions You Can Claim

You can deduct the lesser of 1/3 of your taxable income or Rs. 75,000 for qualifying payments like:

• Contributions to approved charities
• Investment in construction of a new cinema
• Solar panel installations (up to Rs. 600,000 per year for residents)

Additionally, rental income qualifies for a 25% deduction automatically.

Statement of Estimated Tax (SET)

If you have income beyond your salary (rental income, freelance income, interest, etc.), you need to file a SET by 15 August 2025 and pay quarterly installments.

Important: From Y/A 2026/2027 (starting April 2026), the SET requirement may be eliminated based on proposed amendments. But for the current year, it’s still required.

Key Filing Deadlines

Deadline	What’s Due
15 August 2025	SET filing + 1st quarterly installment
15 November 2025	2nd quarterly installment
15 February 2026	3rd quarterly installment
15 May 2026	4th quarterly installment
30 November 2026	Return of Income

Penalties for Late Filing

Don’t miss the deadlines. Penalties include:

• 5% of the tax owing for late filing
• Plus an additional 1% for each month the delay continues
• Interest charges on underestimated quarterly installments

Calculate Your Tax Now

Use our free calculator to instantly see your tax liability for 2025/2026:

👉 Free Sri Lanka Tax Calculator 2025/2026 👈

Need Professional Help?

GDP Consultants can handle your complete tax filing — from calculating your liability to submitting your return electronically.

📞 Get a Free Tax Assessment | ☎️ +94 71 920 4903