Sri Lanka considers PAYE tax relief in upcoming Budget

Sri Lankan government officials have indicated that further relief on Pay-As-You-Earn (PAYE) tax may be included in the upcoming Budget. Minister Bimal Ratnayake acknowledged that the current tax burden on professionals remains high and stated that the Finance Ministry is operating on a policy position to provide relief, though any changes must balance the country’s fiscal position and agreements with the International Monetary Fund (IMF).

In Parliament, Deputy Minister Nishantha Jayaweera addressed questions regarding the government’s election pledge to increase the monthly personal income tax-free threshold to Rs. 200,000. Jayaweera confirmed the commitment remains in place but clarified that the government did not promise implementation within its first year in office. He noted that the threshold has already been increased from Rs. 100,000 to Rs. 150,000.

The government intends to move toward the Rs. 200,000 threshold as state revenue strengthens, focusing on a medium-term strategy to reduce tax rates while expanding the tax base and improving compliance.