Gratuity Tax Calculator Sri Lanka 2026 — IRD APIT Table 02

When your employment ends in Sri Lanka, any gratuity payment is treated as a terminal benefit by the Inland Revenue Department and taxed separately from regular salary. The tax is governed by the IRD's APIT Table 02 under the Fifth Schedule of the Inland Revenue Act No. 24 of 2017 (as amended). This calculator applies that table step by step.

1. Determine the exempt slab

Your years of completed service determine which exempt slab applies to the cumulative total of all terminal benefits you receive in a given year of assessment:

• Service of 20 years or fewer: the first Rs 5,000,000 of total terminal benefits in the year is fully exempt from APIT.
• Service of more than 20 years: the exempt slab doubles to Rs 10,000,000.

The exempt slab is shared across all terminal benefits received in the same year of assessment — not applied to each payment in isolation. If you received, for example, a prior lump-sum payment from a previous employer in the same year, that reduces the slab remaining for your current gratuity. The calculator accounts for this via the “other terminal benefits this YoA” field.

2. Calculate the taxable excess

Taxable excess = (gross gratuity + other terminal benefits this year) − exempt slab, floored at zero.

For most Sri Lankan employees this is zero — the gratuity is within the exempt slab and no tax is owed. APIT Table 02 only bites at higher salary levels or shorter service periods.

3. Apply the concessionary slabs

The excess above the exempt slab is taxed at three concessionary rates — considerably lower than the standard APIT rates on regular income:

• First Rs 1,000,000 of taxable excess → 6%
• Next Rs 1,000,000 → 12%
• Any remaining balance → 18%

4. Marginal calculation for multiple payments

When you have already received other terminal benefits in the same year, the slab already consumed by those payments is excluded from the current calculation. Only the marginalportion of the current payment's taxable excess — after prior payments have exhausted lower slabs — is taxed at the applicable rates. This prevents paying the same low rate twice on the same slab band and accurately mirrors how the IRD aggregates terminal benefits.

5. Net take-home

Net gratuity = gross gratuity − APIT due under Table 02. Because APIT on terminal benefits runs separately from monthly salary APIT, the gratuity tax has no effect on what your employer withholds on your final salary. Your regular APIT on salary is unchanged.

• IRD — Advance Personal Income Tax (APIT) tables and circulars
• IRD — Tax Chart for Y/A 2025/26
• Inland Revenue Act No. 24 of 2017 and amending acts
• Sri Lanka Gratuity Calculator — full Payment of Gratuity Act formula + tax

The exempt slabs and concessionary tax rates on this page were last cross-checked against the IRD's APIT Table 02 and the Inland Revenue (Amendment) Act No. 2 of 2025 on 2026-05-26. Rates are reviewed every April (start of a new SL year of assessment) and whenever a new Inland Revenue amendment takes effect.