Projected revenue at Rs. 5.3 Bn, budget deficit 1.75 Bn

Rs. 6,500 Mn allocated for Clean Sri Lanka initiative

Estate wages hiked to Rs. 1,750 from Rs. 1,350 per day

Rs. 1 Bn allocated to address human-elephant conflict

Rs. 342 Bn for road development programmes

The government has decided to reduce the annual turnover threshold for the registration of Value Added Tax and Social Security Contribution Levy from Rs. 60 million to Rs. 36 million.

The proposal will be implemented with effect from 01 April, 2026.

The new tax system has been proposed with the view of broadening the tax base, President Anura Kumara Dissanayake said during his 2026 Budget speech in Parliament yesterday.

He said that the total number of registered taxpayers in Sri Lanka has increased by 300,000 as of 30 September, 2025, compared to 2024.

The President made this revelation while delivering the 2026 Budget speech.

President Dissanayake also confirmed that the Simplified VAT System (SVAT) has been abolished with effect from 01 October, 2025, and has been shifted to an approved refund process to improve tax compliance and reduce misuse.

Presenting the Budget Proposals for the year 2026 commenced at 1.30 pm and continued till 5.57 pm.

According to the 2026 Budget proposal delivered by the President, the government’s expected revenue for 2026 is set at Rs. 5,300 million while the expenditure has been projected to be Rs. 7,057 million.

The Budget deficit will be Rs. 1,757 million or 5.1% of the Gross Domestic Product.

The government has proposed to remove the Special Commodity Levy on imported coconut oil and palm oil and implement the general tax structure including Value Added Tax.

The new tax system on imported coconut oil and palm oil will be implemented from April 2026, President Dissanayake said.

At present, locally produced coconut oil and palm oil are subjected to Value Added Tax and Social Security Contribution Levy, while imported coconut oil and palm oil are subjected to Special Commodity Levy at Rs. 150 per kilogram and Rs. 275 per kilogram, respectively.

The new tax proposal has been proposed to ensure a level playing field, the President stated.

President Dissanayake said that a total of Rs. 6,500 million has been allocated for the Clean Sri Lanka programme for next year.

President Dissanayake said that the land acquisition process for the proposed Kurunegala-Dambulla expressway is currently underway.

Accordingly, through the 2026 Budget, the government has allocated Rs. 1,000 million to complete the land acquisition process, the President said.

The government has allocated a sum of Rs. 342 billion for road development programmes in the 2026 Budget, President Dissanakaye stated. A total of Rs. 66.1 billion has been allocated for the Kadawatha-Mirigama section of the Central Expressway through the 2026 Budget.

Furthermore, Rs. 10.5 billion for the Pothuhera-Rambukkana and Rs. 20 billion for the Rambukkana-Galagedara section of the central expressway have been allocated through the Budget.

The President said that through the 2026 Budget, a sum of 25,500 million has been allocated to develop Sri Lanka’s digital economy. He also pledged to establish a Digital Economy Council next year.

The allocation will facilitate the infrastructure needs, streamlining investment processes and fostering an innovation-friendly environment.

The government has proposed to allocate an additional provision of Rs. 1,000 million to the Department of Wildlife Conservation to expedite the completion of electric fence constructions and related projects aimed at mitigating human-elephant conflict across the country, the President said.

In addition, Rs. 10 billion has been proposed for research initiatives to identify long-term, research-based solutions beyond the construction of electric fences to reduce these elephant-human conflicts, he said.

Estate worker wages are to be hiked to a total of 1,750 rupees a day, President Dissanayake said, presenting the Budget for 2026.

“We believe that estate workers should be paid a fair daily wage, commensurate with their work,” the President said.

The current minimum wage of an estate worker is 1,350 rupees a day.

An additional 200 rupees will be given daily by the government to encourage estate workers to come to work, Dissanayake said.

“This is as an incentive for them to show up for the 25 days.” The government will allocate 5,000 million rupees for this, he said.

The Budget Debate on the Second Reading of the Appropriation Bill will commence on 08 November and continue for six days. The vote on the Second Reading is scheduled for 14 November (Friday) at 6 pm.

The Committee Stage Debate is set to begin on 15 November and will continue for 17 sitting days, including three Saturdays, until 05 December. The vote on the Third Reading of the Appropriation Bill is to be taken up at 6 pm on 05 December.

During the budget period, Parliament will meet daily, except on Sundays and public holidays. Sessions will begin at 9.30 am on Mondays and at 9 am on other days. Each day’s sittings will continue until 6 pm, with time from 6 to 6.30 pm allocated for adjournment motions, shared equally between the Government and the Opposition, except on voting days.

In addition, during the Committee Stage Debate, provision has been made for five Questions for Oral Answers and one Question under Standing Orders 27(2), apart from the regular business under Standing Orders 22(1) to (6).