IRD introduces tax relief for small savers with new self-declaration system

IRD INTRODUCES SELF-DECLARATION FOR AIT EXEMPTION ON INTEREST FOR EARNERS BELOW RS.1.8MN ANNUALLY

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AIT RATE ON INTEREST, DISCOUNTS AND ISLAMIC FINANCIAL INCOME REDUCED FROM 14% TO 10%

Sri Lanka’s Inland Revenue Department (IRD) has introduced a simplified self-declaration process to alleviate the 10 percent advance income tax (AIT) burden on interest earnings for the low and middle-income earners.

Outlined in Circular SEC/2025/E/03, the new system targets the resident taxpayers with a total annual taxable income not exceeding Rs.1.8 million.

This initiative is part of the broader tax framework reforms aimed at easing the financial strain on the small savers while ensuring fiscal compliance. The taxpayers can now submit a self-declaration form to gain exemption from the standard AIT deductions on the interest income from deposits, savings accounts and Islamic financial products.