If tax was already withheld from your salary or your interest, that money is a credit against your final bill — but only if you claim it on your return. It is not applied automatically, and unclaimed credits are one of the most common ways Sri Lankans quietly pay their tax twice.
APIT and AIT are the two names that withholding travels under. They apply to different income, are withheld by different people, and one of them just changed rate. Getting them onto your return correctly is usually worth more than any deduction you can find.
APIT: withheld from your salary
Advance Personal Income Tax is withheld by your employer directly from your pay, based on your expected annual employment income. It's an estimate collected in monthly instalments throughout the year, reconciled against your actual final tax bill when you file.
Employers don't manually walk through the tax bands each month; the IRD publishes a per-bracket formula (rate × monthly income − a fixed constant) so payroll systems can calculate it directly. Whatever is withheld must be remitted to the IRD by the 15th of the following month.
Source: The Complete Guide to Advance Personal Income Tax (APIT), SimpleBooks; A Guide to APIT, Bizadvisor.
AIT: withheld from investment income, and the rate just doubled
Advance Income Tax applies to certain investment income (interest on fixed deposits and savings is the most common case), withheld by the bank or financial institution paying you, at the point of payment.
From 1 April 2025, the AIT rate on interest and discounts from Sri Lankan deposits rose from 5% to 10%. If you're still mentally budgeting around the old 5% figure, your actual take-home interest is lower than you think.
There's a relief route, though: a resident individual whose total assessable income from all sources doesn't exceed LKR 1,800,000 for the year can submit a self-declaration to their bank, exempting that interest from AIT withholding at source entirely, rather than having it withheld and reclaiming it later on the annual return.
Source: Sri Lanka Tax Agency Issues Circular on Advance Income Tax Relief on Interest Income, Bloomberg Tax; IRD Circular SEC/2025/E/03.
Side by side
| APIT | AIT | |
|---|---|---|
| Applies to | Employment income (salary) | Investment income (interest, discounts) |
| Withheld by | Your employer | Your bank / financial institution |
| Current rate | Progressive bands (6–36%) | 10% flat, on interest (from 1 April 2025) |
| Remitted to IRD by | 15th of the following month | At time of payment |
| Can be avoided at source? | No, always withheld per the bands | Yes, via self-declaration if assessable income ≤ LKR 1.8M |
| Shows up on | Your payslip | Your bank interest statement |
Why the distinction matters
Both are credits against what you actually owe on your annual return, not extra taxes stacked on top. If your total tax liability ends up lower than what was withheld under either scheme, that difference is refundable.
This is where people leave money on the table. APIT is withheld automatically and shows up on every payslip, so it's hard to miss. AIT is quieter: it's a line on a bank statement most people never total up across the year, and now that it's withheld at double the old rate, the amount sitting there waiting to be credited or reclaimed is bigger than it used to be.
What this means in practice
If you have both employment and investment income, don't check them separately. Add up your APIT from every employer's certificate and your AIT from every bank's interest statement, then declare both as credits on your return. Only checking one (usually APIT, because it's the visible one) is how the newly-doubled AIT rate turns into a bigger-than-expected shortfall people don't notice until they've already filed.
Make sure you actually claim them
Both APIT and AIT are money already paid to the IRD in your name. Neither comes back on its own.
Salli tracks withholding certificates against your ledger and applies both as credits when it computes your YA 2025/26 liability, so the figure you file already nets off what was withheld. Filing closes on 30 November 2026.
Sources
- The Complete Guide to Advance Personal Income Tax (APIT), SimpleBooks
- A Guide to Advance Personal Income Tax (APIT) in Sri Lanka, Bizadvisor
- Sri Lanka Tax Agency Issues Circular on Advance Income Tax Relief on Interest Income, Bloomberg Tax
- Circular to Resident Individuals with Interest Income, IRD (SEC/2025/E/03)
Rates and thresholds are current as of publication and can change, so always confirm with the IRD or a licensed tax practitioner before relying on a figure for your own filing.
