In short
- EPF: 8% from the employee and 12% from you. ETF: 3% from you. Both on EPF-liable earnings.
- APIT is income tax taken from salaries using the IRD’s tables, and paid to the IRD monthly.
- Each month: pay salaries, pay EPF and ETF, pay APIT, and keep the schedules.
Hiring your first employee in Sri Lanka brings three new names into your books: EPF, ETF and APIT. Each is a percentage or a table, each has its own monthly payment, and each needs a record. Here’s what they are, in the order you’ll meet them.
EPF: the Employees’ Provident Fund
EPF is a retirement fund. Each month the employee contributes 8% of their EPF-liable earnings, taken from their pay, and you add 12% on top. Both go to the EPF, administered through the Central Bank of Sri Lanka. EPF-liable earnings are usually basic salary plus regular allowances; ask your practitioner which allowances count for your staff.
ETF: the Employees’ Trust Fund
ETF is paid by you alone: 3% of the same earnings. Nothing comes out of the employee’s pay for it.
APIT: tax on salaries
APIT (Advance Personal Income Tax) is income tax you deduct from salaries and pay to the IRD. The amount comes from the IRD’s tax tables, based on monthly pay. Since 1 April 2025, the first Rs 1.8 million a year (Rs 150,000 a month) is covered by the personal relief, so lower salaries have no APIT to deduct.
- Gross salary
- Rs 200,000
- EPF, employee 8% (from pay)
- − Rs 16,000
- APIT (from the IRD tables)
- − from the tables
- EPF, employer 12% (on top)
- Rs 24,000
- ETF, employer 3% (on top)
- Rs 6,000
- Cost to you before APIT
- Rs 230,000
Layout only: the APIT figure depends on the current tables, and the contribution base on which allowances are EPF-liable.
What happens every month
| What | Who pays | When |
|---|---|---|
| Net salaries | You, to each employee | Payday |
| EPF (8% + 12%) with the contribution schedule | You | By the end of the following month |
| ETF (3%) with its schedule | You | By the end of the following month |
| APIT deducted | You, to the IRD | By the 15th of the following month |
Deadlines matter. Late EPF and ETF payments attract surcharges, so set a reminder a few days before each date. Confirm the current deadlines and filing channels with your practitioner; they change from time to time.
At the end of the year
You give each employee a certificate of the APIT deducted, and the totals go into your own return and to your practitioner. Keep payslips and schedules for at least five years.
Two percentages and a table, every month, on time. Payroll is mostly about the calendar.
Rates, thresholds and dates in this guide are as of 14 October 2026. They’re illustrative: rules change, so check with your tax practitioner before a big decision. It’s general information, not tax or legal advice.
Rates shown are illustrative and are checked against ird.gov.lk before launch.