Sri Lanka Income Tax Basics: The Rs 1.8 Million Relief, APIT and the Tax Year

The words "income tax" make a lot of people in Sri Lanka nervous, mostly because nobody explains the basics in plain language. So here they are: how much you can earn before tax starts, why tax already comes out of your salary before you see it, which months count as a tax year, and who actually has to file a return. No jargon, no scary letters from the IRD required.

The Rs 1,800,000 relief: where tax actually starts

The single most useful number in Sri Lankan income tax is the personal relief of Rs 1,800,000 a year — that's Rs 150,000 a month. Earn at or below that and your income tax is zero. Not reduced. Zero.

This is why registering for a TIN is not the same as volunteering to pay tax. The TIN mandate covers every adult, including students, homemakers and part-time workers who earn far below the relief. Tax only enters the picture on income above Rs 1.8 million a year, and it's charged on the part above the relief, not on everything you earned. Someone just over the line pays a small amount on a small slice of income — nobody falls off a cliff edge at Rs 1,800,001.

The tax year runs April to March

Sri Lanka's tax year doesn't follow the calendar. A year of assessment runs from 1 April to 31 March. So the 2026/27 tax year began on 1 April 2026 and ends on 31 March 2027. Your salary, business income and other earnings are grouped into that April-to-March window when the IRD works out what you owe. If you've ever wondered why tax documents talk about years like "2025/26" instead of just "2025", that's the reason.

APIT: the tax that leaves your salary before you do

If you're employed, you've probably already met income tax without filing anything. APIT — Advance Personal Income Tax — is the system where your employer works out the tax on your salary each month, deducts it, and pays it straight to the IRD on your behalf. The deduction on your payslip isn't your employer keeping money; it's your tax being paid in monthly instalments as you earn.

APIT matters for two reasons. First, if your only income is your salary and APIT has been deducted correctly, your tax is largely settled as you go. Second, your employer's calculations depend on your details — which loops back to why your TIN registration needs to match your NIC exactly. Our post on online TIN registration shows how to get that right from the start.

There's a cousin worth knowing: AIT (Advance Income Tax), deducted at source on income like bank interest. If tax has ever been taken off your fixed deposit interest before it reached you, that was AIT doing its job — same idea as APIT, applied to interest instead of salary.

Who has to file a tax return?

Holding a TIN and filing a return are two different duties. Registration is for every adult. Filing a return is mainly for people with tax to report — if your income passes the Rs 1,800,000 relief, if you run a business, or if your income comes from several sources that haven't been fully taxed at source, expect to file. Returns are filed through the IRD's e-services portal, which runs on the department's RAMIS system; once your account is active with the PIN from your TIN registration email, you can file, view your tax file and track payments online instead of visiting an office.

If your total income sits below the relief and your only deductions happened at source, your position is simple — but people with mixed income, rental income or a growing business should check the current filing rules on ird.gov.lk or ask the IRD on 1944, because filing duties follow your actual income, not this general summary.

How this connects to the TIN certificate rule

From November 2026, the TIN certificate is checked at bank counters, land registries and licence renewals — our breakdown of the eight transactions that need a TIN certificate covers what to carry. None of that checking changes how much tax you owe. A certificate check is an identity check: it proves you're registered. The bill, if there is one, still depends on the relief and your real income.

The short version

Register for a TIN because the law requires it and daily life now depends on it. Don't fear it: the first Rs 1,800,000 you earn in a tax year is tax-free, salary tax is mostly handled for you through APIT, and the tax year runs April to March. Keep your certificate and your verification printout somewhere safe, and you're ahead of most of the country. For the full picture of what the IRD does and the services on its portal, head back to our IRD homepage guide.