Can You Claim Health or Education Tax Relief in Sri Lanka?

If you've spent a small fortune on hospital bills, your child's tuition, or your home loan this year, it's natural to ask whether any of it comes back at tax time. The short answer is the one nobody likes: for health, education, and housing loan interest, no. The relief that used to cover those costs is gone.

This matters most if you're a salaried employee or a homeowner, because you can't lean on an accountant at work to sort it out, and a lot of the advice floating around online still describes reliefs that ended years ago. So let's clear it up. Here's what was removed, when, and exactly which reliefs you can still claim for the Year of Assessment 2025/2026 and 2026/2027.

Can I claim health and education expenses as tax relief in Sri Lanka?

No. There is currently no relief for personal health expenses, no relief for education or tuition fees, and no relief for housing loan interest on your home.

These all used to sit inside a single deduction called the expenditure relief, capped at Rs. 1,200,000 a year. That relief was wound down during 2022 and removed completely from January 1, 2023. It does not exist for the Year of Assessment 2024/2025, 2025/2026, or 2026/2027.

So if you were hoping to knock your medical bills or your kid's school fees off your taxable income, that option closed a few years ago. The good news is that several other reliefs are very much alive, and most people miss at least one of them. We'll get to those.

What was the old expenditure relief, and when did it end?

The expenditure relief lived in Paragraph 2(f) of the Fifth Schedule of the Inland Revenue Act. It let a resident individual deduct, up to a combined Rs. 1,200,000 per year, money spent on:

• Health, including medical insurance premiums
• Local education, for yourself or your children
• Housing loan interest
• Listed shares, treasury bonds, and treasury bills
• Contributions to a local pension scheme (outside your employer's scheme)

It was a genuinely useful relief while it lasted. But it was removed in stages by the Inland Revenue (Amendment) Act No. 45 of 2022:

The Rs. 700,000 employment relief that some salaried workers remember was scrapped in the same broad round of changes. The net effect is that the personal relief now does most of the heavy lifting on its own.

What personal reliefs can I actually claim now?

Here's the part worth bookmarking. For YoA 2025/2026 and 2026/2027, these are the reliefs a resident individual can still claim, all under the Fifth Schedule:

A few things to note. The personal relief of Rs. 1,800,000 is automatic and applies to almost everyone. You don't claim it line by line; it's the tax-free slice at the bottom of your income. For a full walkthrough of how it feeds into the brackets, see our income tax calculation guide.

The rent relief is a flat 25% of your rental income, and you take it instead of itemising actual repair, maintenance, and depreciation costs. Our rent relief guide for landlords explains when the 25% beats claiming real expenses.

The solar relief is the one that quietly replaced part of what people used the old expenditure relief for. If you install on-grid solar panels, you can claim up to Rs. 600,000, capped at what you actually spent or the bank loan payments you made for the system. The details are in our solar tax relief guide.

What about housing loan interest?

This one trips up a lot of homeowners, so it's worth stating plainly. Interest on a personal home loan is not deductible for an individual. It was part of the expenditure relief, and it disappeared with everything else on January 1, 2023.

There's one narrow exception that is easy to misread. If you took a loan genuinely for a business, the interest on that loan can be deducted as a business expense. That's a completely separate rule from the old housing relief, and it applies to the loan's business purpose, not to your home. Buying or building the house you live in does not qualify.

Can I deduct donations or other qualifying payments?

Yes, and this is a real opportunity that survived the cuts. These are qualifying payments, which work a bit differently from reliefs but reduce your taxable income all the same:

• Donations to approved charities: deductible up to the lesser of one-third of your taxable income or Rs. 75,000.
• Donations to the government and specified funds: deductible at 100%, with no fixed cap. From YoA 2025/2026, unused amounts on government and government-fund donations can be carried forward to later years.
• Film and cinema expenditure and Samurdhi shop contributions: each deductible up to one-third of your taxable income, with carry-forward for unused amounts.

For most salaried readers, the charity and government donation deductions are the practical ones. If you give to an approved cause, keep the receipt, because that donation can genuinely lower your tax.

What does this mean if I'm a salaried employee?

If you earn a salary, your employer deducts tax through APIT and automatically applies your Rs. 1,800,000 personal relief. What your employer does not do is apply reliefs tied to your other circumstances, your rental income, your solar installation, or your donations. Those are yours to claim when you file.

Here's a quick worked example. Say you earn Rs. 5,000,000 in employment income and spent Rs. 400,000 on family medical bills and tuition during the year.

Before 2023, that Rs. 400,000 of health and education spending could have come off your taxable income under the expenditure relief. Today it gives you nothing. Your taxable income is your Rs. 5,000,000 salary minus the Rs. 1,800,000 personal relief, and the medical and tuition bills don't move the number at all.

So the move for a salaried employee is simple. Stop counting on health, education, or home-loan deductions. Instead, make sure you're claiming the personal relief (you almost certainly are, through APIT) and any rent, solar, or donation deductions that apply to you. If you also have income outside your salary, you may be an instalment payer too. Our APIT guide for employees covers how employment tax fits with the rest.

How do I make sure I claim every relief I'm entitled to?

Start by letting go of the reliefs that no longer exist. Health, education, and housing loan interest are not deductible for an individual, full stop, and any source telling you otherwise is describing the law before 2023.

Then focus on what's real. The Rs. 1,800,000 personal relief is your baseline. On top of that, claim the 25% rent relief if you have rental income, the solar relief if you've gone on-grid, and the donation deductions if you give to approved causes. Keep the paperwork for each as you go.

Tax law in Sri Lanka changes often, sometimes more than once a year. The reliefs that applied when you last filed may not be the same this year. When in doubt, check the relief against the current Year of Assessment before you count on it, because the cost of relying on a relief that was quietly removed is a tax bill bigger than you planned for.