Personal Relief — The Main Relief for Individuals

Every resident individual is entitled to a personal relief of LKR 1,800,000 per year (LKR 150,000 per month), effective from 1 April 2025. This is the amount of income you can earn before any income tax applies at all — it’s automatically built into the APIT tables and your annual assessment.

Qualifying Payments Relief

Beyond personal relief, individuals can deduct “qualifying payments” — donations to approved charities, government institutions, and the President’s Fund — from assessable income. The maximum deduction is the lower of one-third of your assessable income or LKR 75,000 per year. Keep official receipts; only donations to approved recipients qualify.

EPF Contributions

The employee’s 8% EPF contribution is deducted before your taxable salary is calculated, effectively reducing your taxable income and your APIT liability.

Foreign-Currency Income Concession

If you earn income from services performed in or outside Sri Lanka and receive payment in foreign currency, a concessionary maximum tax rate of 15% can apply — well below the top individual rate of 36%. This is particularly relevant for freelancers, consultants, and remote workers serving overseas clients.

Capital Allowances for Businesses

Businesses can claim capital allowances (depreciation-style deductions) on qualifying capital expenditure — machinery, equipment, and certain fixed assets — spread over the asset’s useful life under the Fifth Schedule of the Inland Revenue Act.

NRFC Account Benefits for Overseas Sri Lankans

Non-Resident Foreign Currency (NRFC) accounts offer tax-efficient treatment for overseas Sri Lankans sending money home. See our dedicated NRFC account guide for full details.

Reduced Corporate Rates for Qualifying SMEs

Small and medium businesses meeting specific turnover criteria may qualify for a reduced corporate tax rate compared to the standard 30% rate applied to larger companies — see our SME business tax guide for the specific thresholds.

What’s Not Exempt Anymore

It’s worth noting what used to be exempt and no longer is — IT/BPO company profits are now subject to standard corporate tax, and several previously tax-favoured sectors have been brought into the standard regime as part of Sri Lanka’s post-2022 tax reforms.

Calculate Your Relief-Adjusted Tax

Use our free Income Tax Calculator to see exactly how personal relief and qualifying payments affect your final tax bill.