How is tax on a bonus calculated in Sri Lanka?

Under APIT Table 02. Your employer adds up your expected pay for the whole year of assessment, including every lump sum (the Estimated Gross Aggregate Remunerations, or EGAR), works out the tax on that total, and subtracts the tax your regular salary carries under Table 01 and any tax already deducted from earlier lump sums. What is left is deducted from the bonus.

What counts as a lump-sum payment for APIT?

Table 02 lists bonuses, leave encashment, medical expense reimbursements, salary arrears (for example on reinstatement), and the market value of shares allotted under an employee share scheme, less what you paid for them. Gratuity and other payments on leaving are terminal benefits under Table 03 instead.

Why is so much tax taken from my bonus?

Because the bonus sits on top of your salary. Your salary has already used the tax-free allowance and the lower bands, so the bonus is taxed at the rate of the band your year's total reaches, often 24%, 30% or 36%. Nothing is taxed twice; the bonus simply carries the higher rates that your total income attracts.

Is my bonus taxed if my salary is under LKR 150,000 a month?

It can be. Table 02 says that if your regular pay for the year is within LKR 1,800,000 but the lump sums take the total above it, Table 02 is used to deduct tax from those lump sums. Only the part of the year's total above LKR 1,800,000 is taxed, starting at 6%.

How is a second bonus in the same year taxed?

The calculation is repeated with both bonuses in the year's total, and the tax already deducted from the first bonus is credited. In the IRD's own example, an employee on LKR 170,000 a month pays LKR 36,000 on a LKR 600,000 incentive in April and LKR 133,200 on a further LKR 800,000 in December.

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Bonus tax calculator (APIT Table 02)

How much APIT your employer should deduct from a bonus, incentive, leave encashment or salary arrears, worked out the way the Inland Revenue Department's Table 02 says, with the formula shown using your numbers.

For 2025/2026 and 2026/2027, checked against all four of the IRD's Table 02 examples. Nothing you type leaves your browser.

By Dr. Dulan DiasLast reviewed against IRD publications on 25 October 2026

Your bonus or lump sum

Year of assessment

Load an IRD example:

Regular monthly salary

LKR

Gross, including allowances and non-cash benefits. Assumed the same every month of the year, as in the IRD's examples.

Bonus or lump sum being paid now

LKR

Bonus, incentive, leave encashment, salary arrears or the value of shares allotted.

Earlier lump sums this year (optional)

LKR

Lump sums already paid in this year of assessment, plus any others still due.

Tax already deducted from them (optional)

LKR

An estimate, not tax advice. Table 02 applies to residents and to non-resident citizens with a primary employment. Gratuity and other payments on leaving use Table 03; non-resident non-citizens use Table 04.

Table 02, row by row

D is the Estimated Gross Aggregate Remunerations for the year: regular pay already paid (A), regular pay still to come (B), and every lump sum (C). The tax to deduct now is:

If D is (LKR)	Tax to deduct from the lump sum
Up to 1,800,000	Nil
1,800,001 to 2,800,000	(D × 6%) − [(108,000 + Table 01 tax on A and B) + tax on earlier lump sums]
2,800,001 to 3,300,000	(D × 18%) − [(444,000 + Table 01 tax on A and B) + tax on earlier lump sums]
3,300,001 to 3,800,000	(D × 24%) − [(642,000 + Table 01 tax on A and B) + tax on earlier lump sums]
3,800,001 to 4,300,000	(D × 30%) − [(870,000 + Table 01 tax on A and B) + tax on earlier lump sums]
Above 4,300,000	(D × 36%) − [(1,128,000 + Table 01 tax on A and B) + tax on earlier lump sums]

The fixed sums are not arbitrary: each one makes the formula equal to the tax on D at the progressive rates. So the bonus carries exactly the extra tax that the year's total attracts, at the rate of the highest band it reaches.

Worked example from the IRD

Table 02's Examples 01 and 02: a government employee on LKR 170,000 a month, whose Table 01 deduction is LKR 1,200 a month, receives an incentive of LKR 600,000 in April 2025 and another of LKR 800,000 in December 2025.

April incentive

IRD Table 02, Example 01
D = 2,040,000 + 600,000	2,640,000
D × 6%	158,400
Fixed sum	−108,000
Table 01 tax, 1,200 × 12	−14,400
Tax on the incentive	36,000

December incentive

IRD Table 02, Example 02
D = 2,040,000 + 1,400,000	3,440,000
D × 24%	825,600
Fixed sum	−642,000
Table 01 tax, 1,200 × 12	−14,400
Tax on the April incentive	−36,000
Tax on the incentive	133,200

The second incentive pays a higher rate because, with both incentives, the year's total moves from the 6% row into the 24% row. These match the IRD's figures of LKR 36,000 and LKR 133,200.

Sources

Every rate and rule on this page comes from the documents below, checked on 25 October 2026. Where they and this page differ, they are right.

Tax Table No. 02: Rates for the Deduction of Tax from Lump-sum PaymentsInland Revenue Department of Sri Lanka
Tax Table No. 01: Monthly Tax Deductions from Regular Profits from Primary EmploymentInland Revenue Department of Sri Lanka
Advance Personal Income Tax (APIT) Tables, applicable with effect from 01.04.2025 (index)Inland Revenue Department of Sri Lanka, 25 March 2025
Advance Personal Income Tax TablesInland Revenue Department of Sri Lanka

Questions about tax on a bonus

How is tax on a bonus calculated in Sri Lanka?: Under APIT Table 02. Your employer adds up your expected pay for the whole year of assessment, including every lump sum (the Estimated Gross Aggregate Remunerations, or EGAR), works out the tax on that total, and subtracts the tax your regular salary carries under Table 01 and any tax already deducted from earlier lump sums. What is left is deducted from the bonus.
What counts as a lump-sum payment for APIT?: Table 02 lists bonuses, leave encashment, medical expense reimbursements, salary arrears (for example on reinstatement), and the market value of shares allotted under an employee share scheme, less what you paid for them. Gratuity and other payments on leaving are terminal benefits under Table 03 instead.
Why is so much tax taken from my bonus?: Because the bonus sits on top of your salary. Your salary has already used the tax-free allowance and the lower bands, so the bonus is taxed at the rate of the band your year's total reaches, often 24%, 30% or 36%. Nothing is taxed twice; the bonus simply carries the higher rates that your total income attracts.
Is my bonus taxed if my salary is under LKR 150,000 a month?: It can be. Table 02 says that if your regular pay for the year is within LKR 1,800,000 but the lump sums take the total above it, Table 02 is used to deduct tax from those lump sums. Only the part of the year's total above LKR 1,800,000 is taxed, starting at 6%.
How is a second bonus in the same year taxed?: The calculation is repeated with both bonuses in the year's total, and the tax already deducted from the first bonus is credited. In the IRD's own example, an employee on LKR 170,000 a month pays LKR 36,000 on a LKR 600,000 incentive in April and LKR 133,200 on a further LKR 800,000 in December.