Budget 2027: Personal income tax-free threshold increased to Rs. 162,500 per month

Delivering the 2027 Budget speech in Parliament, President Anura Kumara Dissanayake announced an upward revision to Sri Lanka's personal income tax threshold. The annual tax-exempt threshold has been lifted from the existing Rs. 1.8 million to Rs. 1.95 million, effectively ensuring that individuals earning up to Rs. 162,500 per month will no longer be liable for Pay-As-You-Earn (PAYE) deductions.

The President emphasized that the measure is intended to afford meaningful relief to salaried workers and professional employees who have faced severe economic hardship amid high inflation and rising living expenses over recent years. By broadening the tax-free base, the government intends to enhance disposable income across the workforce.

The proposal comes alongside other broader structural fiscal adjustments aimed at modernizing tax administration while safeguarding revenue targets agreed upon under ongoing multilateral economic recovery frameworks. Authorities noted that further guidance regarding tax slabs and withholding schedules will be issued by the Inland Revenue Department ahead of implementation.