ntroduction
If you’re an employee in Sri Lanka, you’ve probably heard of APIT (Advance Personal Income Tax), formerly known as PAYE (Pay-As-You-Earn). It’s the monthly tax deducted from your salary before you get paid. But how exactly is it calculated? And what happens to that money?
This guide will explain how APIT works, who should pay it, how it’s calculated, and what your employer (or you, if self-employed) must do.
💡 What Is APIT in Sri Lanka?
APIT (Advance Personal Income Tax) is a mandatory income tax deducted from your salary by your employer every month and paid to the Inland Revenue Department (IRD).
It replaced the PAYE system in April 2020 under the Inland Revenue Act No. 24 of 2017 (as amended).
👩💼 Who Pays APIT?
- Employees earning above the tax-free threshold.
- Employers are responsible for deducting and remitting APIT.
- Self-employed individuals do not pay APIT, but must make quarterly tax payments.
📊 APIT Tax Slabs for 2025 (Example Rates)
| Monthly Income (LKR) | Tax Rate |
|---|---|
| Up to 100,000 | 0% |
| 100,001 – 141,667 | 6% |
| 141,668 – 183,333 | 12% |
| 183,334 – 225,000 | 18% |
| 225,001 – 266,667 | 24% |
| 266,668 – 308,333 | 30% |
| 308,334+ | 36% |
📌 Note: Always refer to IRD Sri Lanka for current slabs.
🧮 Step-by-Step: How APIT Is Calculated
🔹 Step 1: Calculate Total Monthly Earnings
Include:
- Basic salary
- Bonuses
- Overtime
- Allowances (some are tax-exempt)
🔹 Step 2: Deduct Tax-Free Allowance
For 2025, assume an annual LKR 1.2 million (LKR 100,000/month) tax-free threshold.
🔹 Step 3: Apply Tax Slabs
Use the table above to apply progressive rates.
🔹 Step 4: Calculate APIT
Here’s an example:
| Monthly Gross Salary | LKR 200,000 |
|---|---|
| Tax-Free | LKR 100,000 |
| Taxable | LKR 100,000 |
| Tax Calculation | First LKR 41,667 at 6%, next at 12%… |
| APIT Payable | ~LKR 12,000 |
🏦 How Is APIT Paid?
- The employer deducts it and pays to IRD by the 15th of the next month.
- The employee can view deductions via T-PIN on the IRD portal.
📁 What Documents Should You Keep?
- Monthly payslips
- APIT deduction summary (Form T10)
- Annual Tax Certificate (Form T6)
🧾 Bonus: Free APIT Calculator for 2025
Use our Sri Lanka Tax Calculator to calculate your monthly APIT in seconds — accurate, simple, and free!
🙋 FAQs
Q: Do I need to file a tax return if my employer pays APIT?
A: Yes, if your total income exceeds the annual threshold. Filing ensures compliance and refund eligibility.
Q: What if my employer doesn’t deduct APIT correctly?
A: You’re still liable. File your return and pay the balance directly to IRD.
🔚 Conclusion
Understanding how APIT works in Sri Lanka helps you plan better, avoid surprises, and stay compliant. Whether you’re an employee or employer, staying informed is your best tool.
Need help with your tax calculation or filing? Visit www.taxcalculator.lk or message us for free guidance.
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