Sri Lanka’s tax revenue increased by over 32% year on year by the end of the third quarter, driven by record tax collection by Customs through Value Added Tax (VAT) and Excise Duty on imports, according to the Finance Ministry.

Accordingly, tax revenue increased by 32.5% year-over-year by the end of September to Rs. 3,563 billion, taking the primary surplus to Rs. 1,465 billion.

The budget deficit, in nominal terms, narrowed by 54.5% to Rs. 441.4 billion, primarily due to an increase in government revenue, including grants, by 31.0% to Rs. 3,834.9 billion in the first nine months of 2025.

The Custom achieved 80% of its annual estimate, contributing to around half of the total tax revenue collected in the first nine months of 2025.

Overall, by the end of the third quarter,  the key revenue-collecting agencies achieved 78% of their annual estimates, with Customs representing 48% of the tax revenue collected, and the Inland Revenue Department(IRD) representing 46% of the tax revenue collected. 

The revenue from VAT on imports increased by 42% to Rs. 605 billion, and revenue from excise duty increased by 94% to Rs. 552 billion in the first nine months of 2025 compared to the same period of 2024.

Revenue from excise duty on motor vehicles significantly increased by Rs. 311 billion to Rs. 349 billion.

The revenue from income tax increased by 11.9% to Rs. 831 billion, and Revenue from VAT increased by 31% to Rs. 1,239 billion in the first nine months of 2025.

GDP at constant prices was Rs. 6,360.6 billion in the first half of 2025, compared to Rs. 6,068.3 billion in the same period of 2024.

However, capital and net lending decreased by 2% to Rs. 455 billion, while total Interest payments increased by 8.6% to 1,907 billion by end of September.