Income tax for software engineers in Sri Lanka — Y/A 2025/2026
A local tech salary under APIT, overseas contract work remitted through your bank, and FD interest your bank has already taxed at 10%. Work out which schedules you file and what is actually left to pay.
What did you earn this year?
Pre-filled for your profession — add what applies, skip what doesn't.
A worked example for software engineers
Illustrative figures for a typical income mix for software engineers — employment salary, bank interest, foreign income — using the default amounts below. Your own numbers will differ; use the wizard above for your actual figures.
Overseas contract work is where most software engineers first need a full return, not just APIT. The bank remittance advice is your evidence of the transfer — keep it alongside the client invoice, since the 15% service-export ceiling only applies to amounts that actually came in through a Sri Lankan bank account. Payments received into a foreign account and never remitted don't qualify for the cap, even if the work itself was for a foreign client. Equity compensation is a separate trap: RSU vesting and ESOP exercises from a foreign parent count as employment income at vesting, valued in LKR on that date, and most local payroll systems don't withhold APIT on it — you carry the full liability into your own return. If you invoice through a Sri Lankan company rather than as an individual, the income is the company's, not yours personally, and this page's numbers don't apply until it's distributed to you as salary or dividend. Consulting on the side of a full-time salaried role stacks on top of that salary for slab purposes, so a second income stream is usually taxed at your highest marginal rate rather than starting again at 6% — worth knowing before you price the work. Keep a simple ledger of foreign remittances by date and source; reconciling a year of Upwork or direct-client payments against bank statements in March is the single most common late-filing cause among engineers.
Common questions
- Do I pay tax again on foreign client payments remitted to Sri Lanka?
- Service income earned abroad and remitted through a Sri Lankan bank is charged at a maximum rate of 15%. It is a ceiling, not a flat charge — if your marginal rate on that slice is below 15% you pay the lower amount. It is not a second charge on top of tax paid abroad.
- My employer already deducts APIT. Do I still file a return?
- Yes, if you have any income beyond that salary — bank interest, overseas contracts, dividends. APIT is a credit against your final bill, not a substitute for the return. Filing is how you claim it back.
- Is the 10% my bank withholds on FD interest the end of it?
- No. Interest AIT is withheld at 10% but is not a final tax. It is credited against your total liability when you file, and if it exceeds what you owe the balance is refundable.
Work out a single figure instead
Estimate your annual liability across salary, freelance, interest and investment income — with 2025/2026 reliefs applied.
Convert foreign-currency receipts at CBSL rates and apply the right tax credit under the Sri Lanka–UK / US / Singapore DTAs.
10% Advance Income Tax withheld on deposit interest — creditable against your return, not a final tax.