How take-home pay is worked out in Sri Lanka: APIT and EPF

Last verified against the primary sources on 15 October 2026.

A gross salary figure tells you very little. The number that matters to an employee is what arrives in the bank. The number that matters to an employer is the full cost of employing that person, including contributions that never appear in net pay.

Quick answer: take-home pay is gross pay less APIT (Advance Personal Income Tax, where regular monthly pay exceeds Rs 150,000) and less the employee's 8 percent EPF [1] [2]. The employer also pays 12 percent EPF and 3 percent ETF on top [2] [3]. Our salary calculator gives a quick figure to check against.

The two sides of a salary

Employee side (what goes into the bank):

• Gross salary
• Less APIT, if regular monthly pay exceeds Rs 150,000
• Less the employee's EPF, 8 percent of earnings
• Net take-home pay

Employer side (the cost of employment):

• Gross salary
• Plus the employer's EPF, 12 percent of earnings
• Plus ETF, 3 percent of earnings
• Total employer cost

APIT: the Rs 150,000 threshold

APIT is the monthly tax employers deduct from employment income. On regular monthly pay, nothing is deducted up to Rs 150,000; that is the annual relief of Rs 1,800,000 spread over twelve months, and it is built into Tax Table 01 [1]. Above it, Table 01 taxes pay at a rate less a constant:

That is the same as annualising the salary, applying the annual bands (6 percent on the first Rs 1,000,000 above the relief, then 18, 24 and 30 percent on Rs 500,000 steps and 36 percent above) and dividing by twelve [1]. The employee's EPF is not taken off before tax: Table 01 says tax is deducted "without deducting any sum" [1].

Declarations. The deduction is compulsory at the table rate; an employee cannot choose a different amount. The Primary Employment Declaration decides which table applies: an employee who gives it to their main employer is taxed there on Table 01, while a second employer, or an employer with no declaration, applies Table 07, at 36 percent if primary employment income is not disclosed [1] [4]. The examples below assume a primary employment.

Other cases. Bonuses go through Table 02, not the monthly table [5]. A mid-year joiner is taxed on the cumulative Table 05; see our guide to APIT for mid-year joiners and leavers.

EPF and ETF: rates and base

EPF. The employee contributes 8 percent and the employer 12 percent of total earnings each month (EPF Act s.10) [2]. An employer with even one employee must contribute [6]. The employee's 8 percent comes out of pay; the employer's 12 percent is a cost on top.

ETF. The employer alone pays 3 percent of total earnings (ETF Act s.16) [3]. It does not reduce take-home pay.

What counts as earnings. Overtime and bonuses are outside the EPF earnings base according to the EPF Department's FAQ, which is Department guidance, not the Act; the definition of earnings in section 47 of the EPF Act does not mention either [10] [2]. Whether a fixed allowance is inside the base depends on what it pays for, not its label, so record the reason for each allowance's treatment.

Exemptions. The EPF Department lists narrow exemptions: household employees, a charity with fewer than ten employees, and certain social service organisations [6].

For an expatriate or a director on payroll, resolve whether provident-fund contributions apply before estimating deductions.

How to work out take-home pay

1. Gross regular monthly pay. The agreed salary and regular allowances for the month. Keep bonuses out; they are taxed on Table 02.
2. APIT. Apply Table 01 to gross regular pay, with nothing deducted first.
3. Employee EPF. 8 percent of EPF earnings.
4. Net take-home. Gross less APIT less employee EPF (and any other agreed deductions).
5. Employer cost. Gross plus 12 percent EPF plus 3 percent ETF on EPF and ETF earnings.

Use the salary calculator to check your figure.

Worked example: Rs 200,000 a month

Assumptions: resident employee, primary employment declaration given, whole salary is EPF earnings.

Check on the annual basis: Rs 2,400,000 less Rs 1,800,000 relief leaves Rs 600,000, taxed at 6 percent: Rs 36,000 a year, or Rs 3,000 a month [1].

The employee receives Rs 181,000 a month; the employer pays Rs 230,000. A payroll budget built on gross salaries alone understates the cost of this role by 15 percent.

Worked example: Rs 140,000 a month

No APIT is due on regular pay because Rs 140,000 is below Rs 150,000. The employee still contributes EPF.

Common payroll errors

Applying APIT below the threshold. Some payroll settings tax every salary. If staff on less than Rs 150,000 a month are querying APIT on regular pay, check the threshold setting.

Deducting EPF before APIT. Table 01 says "without deducting any sum" [1].

Getting the EPF base wrong. Including overtime and bonuses overstates EPF, on the EPF Department's FAQ (Department guidance, not the Act) [10]; leaving out an allowance that is really part of earnings understates it and builds up arrears and surcharge.

Waiting until 15 employees. EPF and ETF apply from the first employee [6]. The figure of 15 decides only whether ETF must be paid electronically, from July 2026 contributions [7].

Paying APIT late. APIT is due within fifteen days after the end of the month, in practice by the 15th (s.86(1)) [8]. Late payment attracts a penalty of 20 percent of the tax due but not paid under section 179(1) if the tax is still unpaid fourteen days after the due date [8] [9], plus interest at 1.5 percent a month or part of a month under section 159(1) [8]. Our tax calendar lists the dates.

Salary structuring

Packages often include more than basic pay:

• Fixed allowances (transport, meals): regular pay for APIT [1]; for EPF, it depends on what the allowance pays for
• Performance bonuses: APIT on Table 02 [5]; outside the EPF base according to the EPF Department's FAQ (Department guidance, not the Act) [10]
• Reimbursements of actual expenses: generally outside both
• Medical cover: employer-paid medical bills and premiums are employment income for APIT unless reimbursed on equal terms to all full-time employees [1]

Relabelling regular allowances as reimbursements to avoid EPF is a compliance risk.

Talk to us. If you want your payroll settings checked against the current tables, our payroll team can go through them with you; book a consultation at our contact page.

This guide is general information on the law as at 15 October 2026 and is not advice on your specific situation.

References

1. Inland Revenue Department. APIT Tax Table 01, Y/A 2025/26, instructions and summary table, paras 01 to 03. https://www.ird.gov.lk/en/publications/APIT_Tax_Tables/2025-2026/Table%20-%201/02.%20APIT_2526_Table_01_Text.pdf . Primary. Accessed 15 October 2026.

1. Central Bank of Sri Lanka. Employees' Provident Fund Act, No. 15 of 1958 (reprint), ss.10 and 47. https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/laws/acts/en/epf_act.pdf . Primary. Accessed 15 October 2026.

1. Employees' Trust Fund Board. Employees' Trust Fund Act, No. 46 of 1980, s.16. https://etfb.lk/wp-content/uploads/2021/03/ETF-Act.pdf . Primary. Accessed 15 October 2026.

1. Inland Revenue Department. APIT Tax Table 07, Y/A 2025/26, instructions and Table 7.1. https://www.ird.gov.lk/en/publications/APIT_Tax_Tables/2025-2026/Table%20-%207/08.%20APIT_2526_Table_07_Text.pdf . Primary. Accessed 15 October 2026.

1. Inland Revenue Department. APIT Tax Table 02, Y/A 2025/26, instructions. https://www.ird.gov.lk/en/publications/APIT_Tax_Tables/2025-2026/Table%20-%202/03.%20APIT_2526_Table_02_Text.pdf . Primary. Accessed 15 October 2026.

1. EPF Department, Central Bank of Sri Lanka. Employer registration and exemptions web page. https://epf.lk/?p=163 . Primary. Accessed 15 October 2026.

1. Employees' Trust Fund Board. Notice: mandatory electronic payment of contributions (April 2026), citing Gazette 2311/39. https://etfb.lk/wp-content/uploads/2026/04/NOTICE-Mandatory-Electronic-Payment-English.pdf . Primary. Accessed 15 October 2026.

1. Inland Revenue Department. Inland Revenue Act, No. 24 of 2017, consolidated, ss.86(1), 159(1) and 179. https://www.ird.gov.lk/en/publications/Acts_Income%20Tax_2017/IRA_Cons_Act_-_2025_Changes.pdf . Primary. Accessed 15 October 2026.

1. Inland Revenue Department. Guide to the Return of Income Tax, Y/A 2025/26, Section 09, penalty of 20 percent of tax due but not paid, 10 percent on a late instalment, interest at 1.5 percent a month or part of a month. https://www.ird.gov.lk/en/Downloads/IT_Individuals_Doc/Asmt_IIT_004_2025_2026_E.pdf . Primary. Accessed 15 October 2026.

1. EPF Department, Central Bank of Sri Lanka. FAQs for Employers, questions 3 and 4 (components included in and excluded from total earnings). https://epf.lk/?page_id=811 . Department guidance, not the Act. Accessed 22 October 2026.