Current tax rate in Sri Lanka and its effects
Income tax is a crucial aspect of a country's tax system, as it helps generate revenue for the government to fund various public services and infrastructure. In Sri Lanka, the income tax system underwent some changes in the 2022–2023 year of assessment as compared to the 2020–2021 year of assessment. The introduction of a tax on gross monthly salary is one of the most significant changes to the income tax system. In 2023, the tax brackets and rates for monthly gross salary are different from the taxable income per annum. The first LKR 100,000 of the gross salary is tax-free, providing relief to those with a lower income. The tax rate then ranges from 6% to 36% for those earning above LKR 308,333 per month. Another change in the income tax system is the tax-free threshold for taxable income per year, which increased from LKR 3,000,000 in 2020/21 to LKR 1,200,000 in 2023. This increase in the tax-free threshold provides relief to those with lower taxable income and reduces the ta...
