Personal income tax relief will be increased from Rs. 1.8 million to Rs. 1.95 million, while the individual income tax rate structure will also be revised under the proposed amendments to the Inland Revenue Act, No. 24 of 2017, President Anura Kumara Dissanayake has announced.

The proposals, presented by the President as part of the 2027 Budget, will revise the taxable income brackets and applicable tax rates for individuals.

Under the revised structure, the first Rs. 850,000 of taxable income will be taxed at 6 percent, while the next Rs. 600,000 will attract a tax rate of 12 percent.

The subsequent Rs. 600,000 will be taxed at 18 percent, followed by 24 percent on the next Rs. 600,000 and 30 percent on the following Rs. 600,000. Any remaining taxable income will continue to be taxed at 36 percent.

Under the existing tax structure, the first Rs. 1 million of taxable income is taxed at 6 percent, while successive Rs. 500,000 brackets are subject to rates of 18, 24 and 30 percent, with the balance taxed at 36 percent.

The proposed changes are aimed at revising the personal income tax framework, alongside an increase in the annual tax-free relief available to individuals.

The amendments will be introduced through changes to the Inland Revenue Act, No. 24 of 2017.