Govt. tax revenue climbs to Rs. 2.71 trn. by June 2026

Sri Lanka’s total government tax revenue increased to Rs. 2.71 trillion during the January–June period of 2026, recording a 25.9% growth compared to the corresponding period in 2025, according to the Public Finance Review (PFR) report.

According to the report issued by the Department of Fiscal Policy of the Ministry of Finance, total government revenue and grants during the 06-month period increased by 27% to Rs. 2.956 trillion.

The country recorded a budget surplus of Rs. 9.5 billion during the period, compared to a budget deficit of Rs. 405.6 billion reported during the same period in 2025.

The report stated that the increase in government revenue and effective expenditure management were the main factors contributing to the surplus.

The government’s total tax revenue target for 2026 is Rs. 4.91 trillion, and 55.2% of this target had already been achieved within the first half of the year.

Customs and IRD account for majority of tax revenue

Sri Lanka Customs made the highest contribution to tax revenue, collecting Rs. 1.29 trillion, accounting for nearly 48% of total tax revenue.

The Inland Revenue Department (IRD) was the second-largest contributor, generating Rs. 1.248 trillion, representing 46% of total tax revenue.

The Excise Department collected Rs. 138 billion, while other tax revenue sources contributed Rs. 35 billion.

Among Customs revenue sources, Value Added Tax (VAT) on imports generated the highest revenue at Rs. 443.7 billion, marking a 25% increase compared to Rs. 354 billion recorded during the same period in 2025.

Revenue from motor vehicle import taxes also increased significantly, rising from Rs. 129.1 billion to Rs. 266.4 billion, a growth of 106.5%.

The report noted that 63% of Customs tax revenue was generated through taxes related to motor vehicle imports.

Income tax and liquor excise revenue increase

The main revenue source of the Inland Revenue Department was income tax, which generated Rs. 568.4 billion, reflecting a 16% increase compared to the previous year.

Corporate income tax revenue increased by 26%, while personal income tax revenue grew by 15%.

The report also stated that VAT revenue from domestic economic activities increased by 26%, while Social Security Contribution Levy (SSCL) revenue rose by 15%.

Excise duty revenue collected from liquor increased by 27% to Rs. 137.5 billion.

Meanwhile, non-tax revenue grew by 43.6% to Rs. 243.6 billion.

Government expenditure rises

Total government expenditure increased by 7.9% to nearly Rs. 2.95 trillion during the first 06 months of 2026.

Recurrent expenditure increased by 6.5%, while capital expenditure rose by 23.6%.

Interest payments declined by 2% to Rs. 1.2346 trillion.

The PFR report further stated that the Sri Lankan economy recorded 5.1% growth in the first quarter of 2026, compared to 4.7% growth recorded during the first quarter of 2025.

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