Budget 2027: Salary increases and allowance hikes for public sector employees

Lanka Business Online and Newswire report that President and Finance Minister Anura Kumara Dissanayake presented the 2027 budget in Parliament, proposing changes to personal income tax. Newsfirst (සිංහල) and Newswire say the monthly tax-free limit would increase from Rs. 150,000 to Rs. 162,500; Lanka Business Online and Newswire report that the annual allowance would rise from Rs. 1.8 million to Rs. 1.95 million.

Lanka Business Online and Newswire report that the proposed tax structure keeps a 6% starting rate, adds a 12% band and expands the following taxable-income bands to Rs. 600,000 each, at rates of 18%, 24% and 30%; income remaining above those bands would face 36%. Newswire says the monthly income level at which the highest rate begins would move from roughly Rs. 358,000 to Rs. 433,000. Newswire estimates additional monthly relief of Rs. 750 to Rs. 15,750, depending on income, and total monthly relief of Rs. 4,250 to Rs. 36,250 when the 2025 tax changes are included. Lanka Business Online says the amendments are proposed to start on April 1, 2027; Newswire says they need to go through the legislative process.

Newswire reports that Rs. 110 billion is allocated to complete the public-sector salary increase begun in 2025. The outlet says the budget proposes raising doctors’ DAT allowance from Rs. 70,000 to Rs. 95,000; doubling nurses’ and paramedical workers’ special-duty allowance from Rs. 6,000 to Rs. 12,000; and adding Rs. 25,000 a month to university academics’ allowance. Ada Derana also reports the academic allowance increase and the higher DAT allowance.

The outlet says armed forces’ daily food allowances would also rise, while pensioners who retired between 2020 and 2024 would receive an additional interim payment of Rs. 2,500 a month. Most allowance adjustments are set for April or July 2027, with some to be introduced in stages and the remaining amounts paid in 2028.