Government plans further increase in PAYE tax threshold in 2027 Budget

The Government plans to further raise the threshold for Pay-As-You-Earn (PAYE) tax in the 2027 Budget, President Anura Kumara Dissanayake said on Saturday.

Addressing the National Trade Union Conference in Colombo, the President said the Government had previously increased the monthly PAYE tax threshold from Rs. 100,000 to Rs. 150,000 and intended to raise it further through the Budget due to be presented next week.

He said the move would provide additional tax relief to salaried employees.

Dissanayake said the private sector made a major contribution to the economy and that the Government had paid particular attention to the economic conditions of private-sector workers.

He said the Government had increased basic salaries in the private sector following discussions with employers and business associations, but acknowledged that the increase had not been sufficient to make a significant difference to workers.

The President said the Government was also looking at allowances and other forms of relief for private-sector employees.

“The PAYE tax is deducted from the salaries of higher-income earners. We increased the threshold from Rs. 100,000 to Rs. 150,000. In this Budget too, we expect to increase that threshold to some extent,” he said.

Dissanayake said the Government had a responsibility to protect workers in the public, semi-government, plantation and private sectors and would continue to focus on their rights and economic security.

Meanwhile, Trade, Commerce, Food Security and Co-operative Development Minister Wasantha Samarasinghe said the Government was drafting new legislation aimed at abolishing the manpower employment system.

Speaking at the same conference, Samarasinghe said the Government did not accept a system in which an intermediary was paid for the labour of a worker engaged in direct employment.

He said efforts to secure permanent employment and stronger rights for manpower workers, which had continued for years, would be taken forward.