• Annual revenue loss of Rs. 60 b expected from PIT threshold change
• VAT amendment implementation postponed to Oct. due to legal issues

Sri Lanka will lose out about 200,000 tax payers from its tax net due to the increase of Personal Income Tax (PIT) threshold to Rs. 150,000 per month, the Finance Ministry said.

Speaking before the Committee on Public Finance on Tuesday (18), Treasury officials revealed that it will lose Rs. 60 billion of tax revenue per annum from the proposed amendment to the PIT.

“Rs. 60 billion loss (per annum) is expected from PIT relief, which is 0.2% of GDP- PIT has collected Rs. 198 billion tax revenue in 2024,” Treasury Deputy Secretary A. K. Seneviratne said.

He said that from about 800,000 individual taxpayers registered with the Inland Revenue Department (IRD), about 200,000 will move out of the tax net due to the increase of the tax free threshold from Rs. 100,000 to Rs. 150,000 per month.

The government, through budget 2025, has proposed to increase the tax free threshold of PIT from Rs. 1.2 million per annum to Rs. 1.8 million per annum while the tax slab of 6% will be broadened from Rs. 500,000 to Rs. 1 million.

It was also revealed that out of 350,000 individual income tax files opened with the IRD on involuntary basis, 180,000 are earning below Rs 1.8 million per annum while out of 150,000 income tax files opened on self-assessment, 97,000 are below Rs. 1.8 million per annum.

Moreover, it was revealed that out of 234,000 companies registered companies for corporate income tax, only 95% are currently active.

Further, Treasury officials revealed that Implementation of Value Added Tax (VAT) amendments are postponed to 1 October, instead of 1 April, due to legal issues while only the Inland Revenue amendments will get rectified in Parliament.