Sri Lanka Income Tax Rates 2017-2018 and Current Tax Guide
A practical reference to historical individual income tax, capital gains and company tax rates in Sri Lanka, followed by important legislative changes affecting taxpayers in 2025-2026.
Individual employment income tax rates for 2017-2018
The original article reported the following historical employment income bands, with a basic allowance of LKR 500,000 and additional employment relief of LKR 700,000. The table reproduces the article's historical summary; eligibility and computation must be checked against the legislation applying to the particular assessment year.
| Annual income band (LKR) | Historical rate |
|---|---|
| Up to 1,200,000 | Nil (including stated relief) |
| Next 600,000 | 4% |
| Next 600,000 | 8% |
| Next 600,000 | 12% |
| Next 600,000 | 16% |
| Next 600,000 | 20% |
| Remaining amount | 24% |
Individual income other than employment: historical rates
The following bands were listed for income other than employment. The original source did not establish all qualifying conditions, so these are presented as historical reference figures rather than a definitive assessment calculation.
| Income band (LKR) | Historical rate |
|---|---|
| First 600,000 | 4% |
| Next 600,000 | 8% |
| Next 600,000 | 12% |
| Next 600,000 | 16% |
| Next 600,000 | 20% |
| Remaining amount | 24% |
Capital gains tax and investment assets in 2018
The original article recorded a 10% capital gains tax on relevant investment-asset gains and referred to gains exceeding LKR 50,000. Capital gains tax under the Inland Revenue Act, No. 24 of 2017 became relevant from 1 April 2018. The LKR 50,000 condition is not a universal exemption: the statutory rules also consider annual aggregate gains and taxpayer eligibility.
Under section 195, a capital asset can include land or buildings, interests in companies, partnerships or trusts, securities and other financial assets, and related options or rights. Trading stock and depreciable assets are excluded from the capital-asset definition. The investment-asset definition and exemptions must be considered separately.
The official Inland Revenue Department capital gains guidance explains computation, residential-property relief and return obligations.
Sri Lanka company tax rates reported for 2018
The historical article categorized certain sectors at 14%, other companies at 28%, and specified activities at 40%. Those rates are retained here as historical figures, not current tax advice. The dividend and remittance entries concern separate tax treatments and should not be confused with corporate income tax on profits.
| Category as shown in original historical article | Historical rate |
|---|---|
| Small and medium enterprises | 14% |
| Export houses | 14% |
| Agricultural business | 14% |
| Education services | 14% |
| Tourism companies | 14% |
| Information technology companies | 14% |
| Betting, gambling, liquor and tobacco business | 40% |
| Other companies | 28% |
| Dividend distributions (historical listing) | 14% |
| Profit remittances (historical listing) | 14% |
Personal income tax rates from 1 April 2025
The Inland Revenue (Amendment) Act, No. 2 of 2025 revised individual tax rates for the year of assessment 2025-2026. The normal progressive bands are applied to taxable income after applicable reliefs, not automatically to gross salary.
| Taxable income after applicable relief (LKR) | Rate |
|---|---|
| First 1,000,000 | 6% |
| Next 500,000 | 18% |
| Next 500,000 | 24% |
| Next 500,000 | 30% |
| Balance | 36% |
Personal relief: LKR 1,800,000 per year is available to resident individuals and non-resident individuals who are Sri Lankan citizens, subject to the Act. It is not deductible against gains from realization of investment assets. See the official 2025-2026 tax chart.
Advance Personal Income Tax (APIT)
Section 83A deals with advance tax deductions from employment income. Employers generally deduct APIT using Inland Revenue Department tables and remit deductions under the applicable deadlines. Refer to the official APIT guidance and APIT tables.
Capital gains tax changes in 2026
The Inland Revenue (Amendment) Act, No. 11 of 2026 changed certain investment-asset gains rates with effect from 3 June 2026. In particular, the Inland Revenue Department announced a 15% rate for individuals and partnerships and a 30% rate for trusts, unit trusts, mutual funds and non-governmental organizations. Company investment-asset gains are generally subject to 30%. Transactions before the effective date must be considered under the law then in force.
For individuals, a qualifying principal residence may be excluded when the statutory ownership and occupation requirements are met. The small-gain exemption and the treatment of quoted shares also require checking the applicable provisions.
Current corporate income tax overview
Company income tax is generally charged at 30%, with a 40% rate for specified betting and gaming activities and certain liquor and tobacco activities. Special incentives, exemptions and transitional provisions can change the outcome for an individual company.
| Tax category | Rate / treatment |
|---|---|
| Standard company taxable income | 30% |
| Specified betting and gaming profits | 40% |
| Specified liquor and tobacco profits | 40% |
| Company gains on realization of investment assets | 30% |
| Individuals and partnerships: investment-asset gains from 3 June 2026 | 15% |
| Trusts, unit trusts, mutual funds and NGOs: investment-asset gains from 3 June 2026 | 30% |
For legislative amendments, consult the official Acts directory, including the 2026 amendment. The 2025-2026 IRD tax chart supplies the earlier baseline rates; the June 2026 changes supersede relevant earlier capital-gains entries.
Residents, non-residents and taxable income
Tax residence affects the scope of taxable income, applicable reliefs and possible treaty benefits. Residents may be taxed on income within the scope of the Act, including relevant foreign-source income, while non-residents are generally subject to Sri Lankan source-income rules. Specific withholding, source and double-tax treaty provisions can alter the treatment. Always confirm residence status for the particular assessment year.
Filing, payments and recordkeeping
Income tax is generally administered through self-assessment. Applicable taxpayers may need to file a statement of estimated tax and pay quarterly instalments. The IRD lists typical instalment dates of 15 August, 15 November, 15 February and 15 May, and the income-tax return deadline generally falls on 30 November after the assessment year, subject to applicable rules and extensions.
For investment-asset gains, the IRD generally requires a capital gains return and payment within 30 days after the end of the month in which the asset is realized. Keep purchase and sale documents, valuation records and evidence of deductible costs.