Public Finance Data and Analysis
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Sri Lanka imposes its highest tax rate at a relatively lower income threshold compared to other South Asian countries. Individuals earning over LKR 308,333 per month are subject to a steep 36% tax rate, making Sri Lanka the fastest in the region to reach its top tax bracket - the highest tax rate at which income is taxed. In comparison, India and Bhutan apply their top tax rate of 30% on incomes around LKR 457,000 and LKR 456,000, respectively, while Pakistan’s 35% rate applies to incomes above LKR 374,000. Bangladesh, with a lower top tax rate of 25%, taxes incomes above LKR 357,000. Nepal, the only country with a higher top tax rate than Sri Lanka, charges 39% on incomes over LKR 950,958, while its 36% rate applies to earnings above LKR 381,000—still higher than Sri Lanka’s threshold.
Table 1: Upper personal income tax boundary in South Asia (local currency and LKR equivalent)
|
Country |
Upper income boundary in Local Currency |
LKR equivalent of Upper income boundary*
|
Tax rate |
|
Sri Lanka |
1,200,000 |
1,200,000 |
36% |
|
Bangladesh |
1,650,000 |
4,281,420 |
25% |
|
Pakistan |
4,100,000 |
4,486,220 |
35% |
|
India |
1,500,000 |
5,478,600 |
30% |
|
Bhutan |
1,500,000 |
5,466,435 |
30% |
|
Nepal |
5,000,000 |
11,411,500 |
39% |
|
Maldives |
2,400,000 |
47,329,920 |
15% |
