New Income Tax Changes for 2024/2025 Tax Year

Executive summary: what changed this tax year

Sri Lanka's 2024/2025 income tax cycle keeps the 6%–30% banding but refreshes relief allowances and tightens Inland Revenue reconciliations. Payroll and finance directors have a narrow window to reconfigure APIT, issue new employee declarations, and document the approvals auditors now request.

Pain points finance leaders are highlighting

• Confusion around stacking reliefs (personal, spouse, child) when employees submit incomplete declarations.
• Payroll software lagging behind the April updates, forcing manual journal overrides.
• RAMIS penalties triggered by quarterly estimates that understate the now-higher taxable base.

Implementation roadmap for payroll teams

1. Week 1 – Policy alignment: circulate the Inland Revenue circular and WinCore's updated APIT memo to HR, payroll, and business unit heads. Obtain signed declarations (TD) from all staff.
2. Week 2 – System configuration: test the revised tax table in your payroll engine. Where the vendor has not issued a patch, use the override workbook provided by the APIT planning worksheet.
3. Week 3 – Controls and sign-off: run a dry RAMIS submission, capture variance analysis versus prior year, and document approvals at the finance committee level.

Sector-specific watchpoints

• Technology & SaaS: account for cross-border stock grants using vest-date FX; attach support to payroll packs.
• BPO and shared services: classify foreign allowances and per diems as emoluments unless exempted in writing.
• Hospitality & retail: reconcile service charge pools monthly and evidence the allocation basis for Inland Revenue inspectors.

What to brief your board and auditors

Provide directors with an APIT variance analysis, highlight at-risk employee groups (expatriates, allowance-heavy grades), and outline remediation owners. Auditors will request evidence of management review, so store sign-off emails and meeting minutes in the tax folder.

When crafting the board memo, include a table summarising relief utilisation, outstanding declarations, and mitigation steps. This keeps executive focus on decision points instead of raw calculations and shows governance discipline to external stakeholders.

Where WinCore can accelerate the transition

Our tax advisory pod monitors RAMIS updates weekly and delivers signed-off APIT configuration guides. We also facilitate cross-functional workshops so HR, finance, and IT agree on payroll change logs that satisfy statutory auditors.

Pair this article with these resources:

• Quarterly tax estimate checklist – avoid surprises on provisional payments.
• VAT registration guide – ensure indirect taxes align with income tax disclosures.

Close the loop by scheduling a post-implementation review within 45 days. Measure reconciliation speed, employee query volume, and variance thresholds so your payroll engine remains audit-ready for the rest of the tax year.