The personal relief jumped 50%, and the 12% slab is gone.
From 1 April 2025 the personal relief rose from Rs 1,200,000 to Rs 1,800,000. The 12% slab, the second-lowest rate in the old schedule, is gone. Tax now steps from 6% straight to 18%, but the first band is twice as wide and the relief is bigger. Anyone who paid tax last year pays less this year: the saving grows with income and levels off at Rs 246,000 a year.
12% · 18% · 24% · 30% next 500,000 each
36% above 2,500,000
18% · 24% · 30% next 500,000 each
36% above 2,500,000
Your salary, before and after
Employment income only · personal relief onlyAt this salary the new rules save you Rs 198,000 a year. Rough guide only: APIT your employer already deducted is a credit you settle at the end, and other reliefs (solar, charity, rent upkeep) lower the bill further.
Advance Income Tax on interest doubled to 10%.
Banks now deduct Advance Income Tax on interest at 10%, up from 5%. It is an advance, not a final tax: it comes off your bill at Pay & file. If your total income sits under the Rs 1,800,000 relief, you can give your bank a self-declaration and stop the deduction. Declare honestly: a wrong declaration carries penalty risk under Section 181.
SVAT is repealed. VAT now reaches digital services.
The Simplified VAT (SVAT) scheme is repealed from 1 October 2025; registered businesses move to standard VAT. From April 2026, VAT applies to non-resident digital service providers selling into Sri Lanka. VAT registration becomes mandatory for importers and exporters, whatever their turnover.
Paper returns are over.
From 1 July 2025, every VAT return must go through the IRD e-Filing portal. Individual and corporate income tax returns are following the same path. TaxWise prepares your schedules cage by cage and walks you through submission. You file on the IRD portal yourself, with every number already in place.
Refunds now have to arrive within 30 months.
The IRD must process and pay valid VAT refunds within 30 months of the relevant period. That is now a hard deadline written into the Act, not a target. If you have overpaid income tax through APIT, AIT or instalments, the refund guide walks through claiming it.