Revised Tax Rates: Key Changes You Should Know

Revised Tax Rates: Key Changes You Should Know

The amendment to personal income tax thresholds has been officially gazetted.

Starting April 1st, personal income tax will be applied under the revised thresholds.

New Personal Income Tax Thresholds

According to the Inland Revenue Amendment Bill:

• Monthly income up to Rs 150,000 is exempt from personal income tax.
• For income exceeding Rs 150,000:
  • The first Rs 83,334 is taxed at 6% (Rs 5,000).
  • The next Rs 41,667 is taxed at 18% (Rs 7,500).
  • The following Rs 41,667 is taxed at 24% (Rs 10,000).
  • The next Rs 41,667 is taxed at 30% (Rs 12,500).
  • Any income beyond this is taxed at 36%.

How This Impacts Taxpayers

For example, under the new structure:

• A person earning Rs 500,000 per month will now pay Rs 86,000 in taxes—a reduction of over Rs 22,000 compared to the previous system.
• A person earning Rs 250,000 per month, who previously paid Rs 21,000, will now pay approximately Rs 8,000, saving Rs 13,000 per month.

J.T. Chandana, Secretary of the Inland Revenue Staff Officers’ Association, stated that these reductions aim to ease the tax burden on lower-income earners and encourage professionals to remain in the country. Compared to the previous system, taxes payable from April 1st will be lower, which is a positive development.