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Sri Lanka’s new personal income tax structure reduces tax burden across income groups
In his recent address to Parliament, the President announced proposed reforms to Sri Lanka’s Personal Income Tax (PIT) system. These changes include raising the tax-free monthly income threshold from LKR 100,000 to LKR 150,000, as well as adjusting the tax brackets to offer substantial savings for taxpayers. At the same time, these proposals reinforce Sri Lanka’s position as one of the region’s least taxed countries for lower-income earners. Although the President did not outline the precise tax rates for each bracket, PublicFinance.lk has estimated the new rates and brackets based on the proposed reductions upto LKR 300,000 per month. Exhibit 1 below summarises these revised tax brackets and corresponding rates. Exhibit 1: Revised tax brackets and corresponding rates Monthly Income Current Slabs Proposed Slabs Tax Rate (%) Lower Boundary Upper Boundary Lower Boundary Upper Boundary Up to 100,000 Up to 150,000 0% 100,000 141,667 150,000 233,333 6% 141,667 183,333 12% 183,333 225,000 233,333 275,000 18% 225,000 266,667 275,000 316,667 24% Sources: Inland Revenue Department of Sri Lanka, President’s Media Division Sri Lanka already provides the highest tax-free threshold and a comparatively lower tax burden for low-income earners than most other South Asian countries, with the exception of the Maldives. In a previous blog, PublicFinance.lk noted that Sri Lanka’s current tax-free income threshold of LKR 100,000 per month is higher than those in Bangladesh (LKR 75,682), Pakistan (LKR 54,710), and India and Bhutan (approximately LKR 91,000). However, while income earners below LKR 250,000 per month enjoy relatively low tax obligations, the burden beyond this amount rises sharply to the highest in the region.
විදසුන්
Sri Lanka’s new personal income tax structure reduces tax burden across income groups
In his recent address to Parliament, the President announced proposed reforms to Sri Lanka’s Personal Income Tax (PIT) system. These changes include raising the tax-free monthly income threshold from LKR 100,000 to LKR 150,000, as well as adjusting the tax brackets to offer substantial savings for taxpayers. At the same time, these proposals reinforce Sri Lanka’s position as one of the region’s least taxed countries for lower-income earners. Although the President did not outline the precise tax rates for each bracket, PublicFinance.lk has estimated the new rates and brackets based on the proposed reductions upto LKR 300,000 per month. Exhibit 1 below summarises these revised tax brackets and corresponding rates. Exhibit 1: Revised tax brackets and corresponding rates Monthly Income Current Slabs Proposed Slabs Tax Rate (%) Lower Boundary Upper Boundary Lower Boundary Upper Boundary Up to 100,000 Up to 150,000 0% 100,000 141,667 150,000 233,333 6% 141,667 183,333 12% 183,333 225,000 233,333 275,000 18% 225,000 266,667 275,000 316,667 24% Sources: Inland Revenue Department of Sri Lanka, President’s Media Division Sri Lanka already provides the highest tax-free threshold and a comparatively lower tax burden for low-income earners than most other South Asian countries, with the exception of the Maldives. In a previous blog, PublicFinance.lk noted that Sri Lanka’s current tax-free income threshold of LKR 100,000 per month is higher than those in Bangladesh (LKR 75,682), Pakistan (LKR 54,710), and India and Bhutan (approximately LKR 91,000). However, while income earners below LKR 250,000 per month enjoy relatively low tax obligations, the burden beyond this amount rises sharply to the highest in the region.
විදසුන්
Sri Lanka’s new personal income tax structure reduces tax burden across income groups
In his recent address to Parliament, the President announced proposed reforms to Sri Lanka’s Personal Income Tax (PIT) system. These changes include raising the tax-free monthly income threshold from LKR 100,000 to LKR 150,000, as well as adjusting the tax brackets to offer substantial savings for taxpayers. At the same time, these proposals reinforce Sri Lanka’s position as one of the region’s least taxed countries for lower-income earners. Although the President did not outline the precise tax rates for each bracket, PublicFinance.lk has estimated the new rates and brackets based on the proposed reductions upto LKR 300,000 per month. Exhibit 1 below summarises these revised tax brackets and corresponding rates. Exhibit 1: Revised tax brackets and corresponding rates Monthly Income Current Slabs Proposed Slabs Tax Rate (%) Lower Boundary Upper Boundary Lower Boundary Upper Boundary Up to 100,000 Up to 150,000 0% 100,000 141,667 150,000 233,333 6% 141,667 183,333 12% 183,333 225,000 233,333 275,000 18% 225,000 266,667 275,000 316,667 24% Sources: Inland Revenue Department of Sri Lanka, President’s Media Division Sri Lanka already provides the highest tax-free threshold and a comparatively lower tax burden for low-income earners than most other South Asian countries, with the exception of the Maldives. In a previous blog, PublicFinance.lk noted that Sri Lanka’s current tax-free income threshold of LKR 100,000 per month is higher than those in Bangladesh (LKR 75,682), Pakistan (LKR 54,710), and India and Bhutan (approximately LKR 91,000). However, while income earners below LKR 250,000 per month enjoy relatively low tax obligations, the burden beyond this amount rises sharply to the highest in the region.
විදසුන්
Sri Lanka’s new personal income tax structure reduces tax burden across income groups
In his recent address to Parliament, the President announced proposed reforms to Sri Lanka’s Personal Income Tax (PIT) system. These changes include raising the tax-free monthly income threshold from LKR 100,000 to LKR 150,000, as well as adjusting the tax brackets to offer substantial savings for taxpayers. At the same time, these proposals reinforce Sri Lanka’s position as one of the region’s least taxed countries for lower-income earners. Although the President did not outline the precise tax rates for each bracket, PublicFinance.lk has estimated the new rates and brackets based on the proposed reductions upto LKR 300,000 per month. Exhibit 1 below summarises these revised tax brackets and corresponding rates. Exhibit 1: Revised tax brackets and corresponding rates Monthly Income Current Slabs Proposed Slabs Tax Rate (%) Lower Boundary Upper Boundary Lower Boundary Upper Boundary Up to 100,000 Up to 150,000 0% 100,000 141,667 150,000 233,333 6% 141,667 183,333 12% 183,333 225,000 233,333 275,000 18% 225,000 266,667 275,000 316,667 24% Sources: Inland Revenue Department of Sri Lanka, President’s Media Division Sri Lanka already provides the highest tax-free threshold and a comparatively lower tax burden for low-income earners than most other South Asian countries, with the exception of the Maldives. In a previous blog, PublicFinance.lk noted that Sri Lanka’s current tax-free income threshold of LKR 100,000 per month is higher than those in Bangladesh (LKR 75,682), Pakistan (LKR 54,710), and India and Bhutan (approximately LKR 91,000). However, while income earners below LKR 250,000 per month enjoy relatively low tax obligations, the burden beyond this amount rises sharply to the highest in the region.
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EconomyNext
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