President Anura Kumara Dissanayake is due to present the 2027 Budget to Parliament on Thursday 12 November, with income tax relief, value added tax (VAT) cuts and a change to the tax on books among the measures the public is watching.
The session is scheduled to begin at 1.30 p.m. The exact measures and dates for any changes will be confirmed only during the presentation, and the government has not officially said what the Budget will contain.
The first area is Pay-As-You-Earn (PAYE) income tax. In April 2025 the government raised the monthly tax-free income threshold from Rs. 100,000 to Rs. 150,000. In September, Deputy Minister of Economic Development Nishantha Jayaweera said the government remained committed to raising it to Rs. 200,000.
Minister Bimal Ratnayake said in a television interview in September that PAYE taxes remained high for professionals. He said the Finance Ministry supported further relief and that changes could be announced in the Budget, subject to the country’s fiscal position and its commitments under the International Monetary Fund (IMF) programme.
The second area is VAT. President Dissanayake has previously outlined plans to reduce VAT gradually over the next two to three years. The standard rate is now 18 percent, and it is not yet clear whether it will change in this Budget.
The third is the tax on books. Prime Minister Dr. Harini Amarasuriya said on 25 September, at the opening of the 27th Colombo International Book Fair at the BMICH, that the President had instructed her to tell the public that a significant change to VAT on books would come through the Budget. The government has not said whether the tax will be cut or removed.
Background
Sri Lanka is following an IMF-supported economic programme that sets targets for government revenue. Ministers have repeatedly said that any tax reduction must be balanced against those targets and against public spending needs.
The government has also announced the deferral of a proposed property tax on residential housing. It has said it intends to reduce some existing taxes while keeping its revenue goals.
A separate report from the research group Verité Research, released this week, said that nearly 40 percent of the promises in the 2025 Budget had fallen short of substantial implementation. The Budget speech sets out the government’s spending and revenue plans for the coming year, and Parliament then debates and votes on the proposals.
What it means
For salaried workers, a higher PAYE threshold would reduce the income tax deducted from monthly pay for those earning above the current limit. The size of any gain would depend on the final threshold and on when it takes effect.
A lower VAT rate would affect the price of many goods and services, though the effect on shop prices depends on how and when the change is applied. Readers, including Sri Lankans abroad who support families at home, should wait for the formal announcement before assuming any change, because none of these measures has been confirmed.
