Question 1

What salary is tax-free in Sri Lanka?

Accepted Answer

A monthly gross of up to Rs. 150,000 (Rs. 1.8 million per year) attracts no APIT under the current 2026/27 personal relief. The IRD's latest published APIT tables are labelled 2025/26, and the statutory rates remain effective from 1 April 2025. EPF at 8% of eligible monthly earnings and the Rs. 25 stamp duty can still apply, so take-home remains below gross.

Question 2

How is EPF deducted from my salary?

Accepted Answer

The statutory minimum employee EPF contribution is 8% of total monthly earnings, while the employer adds 12% EPF. The employer also pays 3% ETF on total monthly earnings. Official definitions include salary and specified allowances, although the contributory earnings figure shown on a payslip can differ from headline gross where excluded payments apply.

Question 3

What is the difference between basic salary and gross salary?

Accepted Answer

Basic salary is one component of gross salary; gross includes basic plus allowances and other remuneration. APIT applies to taxable employment income. EPF and ETF use statutory total-earnings definitions that include salary and specified allowances, so do not assume every allowance is automatically excluded.

Question 4

What is the difference between gross salary and take-home salary?

Accepted Answer

Gross salary is employment income before employee deductions. Take-home or net salary is what remains after APIT income tax, employee EPF at 8% of eligible earnings, applicable stamp duty and any other employee deductions. Employer EPF and ETF are paid on top and do not reduce take-home pay.

Question 5

How do I calculate my take-home salary?

Accepted Answer

Take-home = Gross salary minus APIT income tax minus employee EPF at 8% of EPF-eligible earnings minus applicable stamp duty. For example, Rs. 200,000 gross with the full amount EPF eligible gives Rs. 180,975 take-home after APIT of Rs. 3,000, EPF of Rs. 16,000, and Rs. 25 stamp duty.

Question 6

Why is my increment worth less than I expected?

Accepted Answer

A raise increases your gross, but APIT and EPF rise with it, and if the raise pushes you into a higher tax band, the portion above the band boundary is taxed at the higher rate. Only the excess is affected (there's no cliff), but the take-home gain is always smaller than the gross gain. The sweet-spot hint shows the largest raise that stays inside your current band.

Question 7

How much tax will I pay on my bonus?

Accepted Answer

Bonuses are taxed under APIT Table 02: your annual income is estimated first, and the bonus is taxed at whichever band it lands in on top of that. The rate can be higher than your usual monthly slab. No EPF is deducted from bonuses.

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Salary tax in Sri Lanka, quick answers