If you’re employed in Sri Lanka, you’ve probably noticed a deduction labeled APIT on your payslip. Here’s what it actually is, why it replaced PAYE, and how it affects you.
What Does APIT Stand For?
APIT stands for Advance Personal Income Tax. It’s a monthly income tax withheld by your employer under Sri Lanka’s Inland Revenue Act, then remitted directly to the Inland Revenue Department (IRD) on your behalf — you never touch the money.
APIT replaced the older PAYE (Pay As You Earn) scheme. The mechanics are similar — tax deducted at source each month — but APIT operates under updated IRD rules, so if you’re used to the old PAYE terminology, APIT is effectively its successor.
Who Has to Pay It?
Any employee whose monthly taxable income exceeds the tax-free threshold (LKR 150,000/month, LKR 1,800,000/year for 2025/26) is subject to APIT. Below that, your employer deducts nothing.
What Counts as Taxable Employment Income?
APIT is calculated on more than just your basic pay. It typically includes:
- Basic salary
- Overtime payments
- Bonuses and incentives
- Transport and fuel allowances
- Commissions
- Certain non-cash company benefits
Employee EPF contributions (8%) are deducted before APIT is applied — they reduce your taxable base, they’re not taxed themselves.
How the Rates Work
Sri Lanka uses a progressive system — you only pay the higher rate on the slice of income within that band, not your whole salary:
| Annual Taxable Income | Tax Rate |
|---|---|
| First Rs. 1.8 million | 0% |
| Next band | 6% |
| Next band | 18% |
| Next band | 24% |
| Next band | 30% |
| Above that | 36% |
For a month-by-month breakdown with real take-home figures at different salary levels, see our Take-Home Salary Calculator guide — it walks through exact numbers rather than bands.
Common Questions
Is EPF taxable?
No — your 8% employee EPF contribution is deducted before APIT is calculated, so it lowers your taxable income rather than being taxed itself.
Are bonuses taxed?
Yes. Bonuses count as taxable employment income and are included in your APIT calculation for the month they’re paid.
What if my employer deducts the wrong amount?
Payroll errors happen. You’re still responsible for filing an accurate annual Return of Income — if your employer under- or over-deducted, it gets reconciled when you file, and you may be owed a refund. This is exactly why independent salary calculators are worth checking against your payslip.
👉 Want your exact monthly APIT and take-home pay? Use our free Sri Lanka tax calculators or read the full take-home pay breakdown.