If you’ve ever looked at your payslip and wondered what APIT or PAYE means, you’re not alone. These are common tax terms used in Sri Lanka to describe the income tax deducted directly from your salary — but many employees don’t fully understand how they work.
In this simple guide, we break down what APIT and PAYE are, how they’re calculated, and what it means for you as an employee in Sri Lanka.
🔍 What Is PAYE?
PAYE stands for Pay As You Earn. It’s a system where employers deduct income tax from your monthly salary and pay it directly to the Inland Revenue Department (IRD).
Until 2020, this was the main method used to collect employee taxes in Sri Lanka.
🔄 What Is APIT?
In April 2020, PAYE was replaced by APIT, which stands for:
Advanced Personal Income Tax
Under APIT, tax is still deducted by your employer, but with your consent. However, in most cases (like private sector jobs), APIT deductions are mandatory if your income exceeds the tax-free threshold.
📊 Tax-Free Threshold in 2025 (Sri Lanka)
If your monthly income exceeds Rs. 100,000 (Rs. 1.2 million annually), you are liable to pay APIT.
🧮 How Is APIT Tax Calculated?
Sri Lanka uses progressive tax slabs, meaning the more you earn, the higher your rate.
| Income Range (Monthly) | Tax Rate |
|---|---|
| Up to Rs. 100,000 | 0% |
| Rs. 100,001 – 141,667 | 6% |
| Rs. 141,668 – 183,333 | 12% |
| Rs. 183,334 – 225,000 | 18% |
| Rs. 225,001 – 266,667 | 24% |
| Rs. 266,668 – 308,333 | 30% |
| Over Rs. 308,333 | 36% |
✅ Tip: Use www.taxcalculator.lk to get an instant and accurate monthly tax estimate!
🧾 Do You Still Need to File an IRD Return?
Yes! Even if APIT is deducted by your employer, you may still be required to:
- Register for an Income Tax File with IRD
- File an annual return (especially if you have other income like rent, dividends, or freelance earnings)
🤔 Common Questions from Employees
✅ Can I claim a refund if too much tax was deducted?
Yes. If your employer overpaid on your behalf (due to bonus, leave pay, etc.), you can file a tax return and request a refund from IRD.
✅ Is APIT optional?
For government employees, it may be optional. But for most private-sector employees, it’s mandatory once income exceeds the threshold.
✅ Who’s responsible for paying?
Your employer deducts and pays APIT, but it’s still your personal tax liability.
📌 Key Takeaways
- APIT is the updated system replacing PAYE in Sri Lanka.
- It ensures taxes are deducted from your salary before you receive it.
- Use an online tax calculator to check how much tax you owe monthly.
- You may still need to file a tax return for transparency and refunds.
👉 Need Help Understanding Your Salary Tax?
Visit www.TaxCalculator.lk — Sri Lanka’s free online tool to:
- Calculate APIT / PAYE instantly
- Download your tax breakdown
- Stay updated with IRD guidelines
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