🇱🇰 Supreme Court Rules Judges Are Liable to Income Tax, Upholds APIT Deductions

⭕ Sri Lanka’s Supreme Court has ruled that judicial officers are liable to pay income tax and that Advance Personal Income Tax, or APIT, can lawfully be deducted from their remuneration.

⭕The judgment was delivered on Sept. 15, 2026, dismissing three appeals filed by associations representing judicial officers.

⭕ The cases were brought by representatives of the High Court Judges’ Association, Judicial Service Association and Association of Judicial Officers of Labour Tribunals. They challenged the application of the Inland Revenue Act No. 24 of 2017, as amended by Act No. 45 of 2022, arguing that judges are not employees of the Government and that treating them as employees for tax purposes could undermine judicial independence.

⭕ The Supreme Court rejected this argument. Court held that describing judicial officers as employees under the Inland Revenue Act does not create a conventional employer employee relationship with the Ministry of Justice. It only identifies the institution responsible for paying their remuneration and deducting APIT for tax purposes.

⭕ The Court also held that applying a generally applicable and non-discriminatory income tax to judges does not amount to an unconstitutional reduction of judicial remuneration or an interference with judicial independence. High Court Judges, District Judges and Magistrates are therefore liable to income tax on their remuneration, and the authorities are entitled to deduct APIT from it.

⭕ The dispute originally reached the Court of Appeal in 2023, where the judicial associations sought to stop APIT deductions and recover amounts already deducted. The Court of Appeal dismissed the applications on Nov. 2, 2023, leading to the appeals before the Supreme Court.

⭕ However, the Supreme Court separately acknowledged concerns over the financial impact of taxation on judicial officers. Justice De Silva said the solution is not to exempt judges from a generally applicable tax, but to ensure that judicial officers receive adequate remuneration reflecting their responsibilities and their distinct position within the national wages structure.

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