Sri Lanka Capital Gains Tax

---
name: sri-lanka-capital-gains-tax
description: "Sri Lanka Capital Gains Tax on realisation of investment assets — rates, exemptions, calculation and filing (Inland Revenue Act No. 24 of 2017, as amended by Act No. 11 of 2026)."
license: "AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content)"
metadata:
  source: openaccountants
  openaccountants_url: "https://www.openaccountants.com/skills/sri-lanka-capital-gains-tax"
  jurisdiction: "LK"
  tax_year: "2025"
  last_updated: "2026-07-13"
  reviewed_by: "Lal kumarasiri"
---

# Sri Lanka Capital Gains Tax (CGT)

## 

- **General CGT rate on transfer of investment assets** — 10% percent (On gains from transfer (sale, gift, redemption, destruction, expiry, or loss) of investment assets including real estate, shares (listed and unlisted), and other capital assets)  _(IRA s 50–s 57; Sixth Schedule)_
- **Exempt assets** — Primary/principal residence held for more than 3 years; movable assets used exclusively for personal use; gains below the de minimis threshold; transfers pursuant to reorganisations meeting specific conditions; assets of deceased persons in certain circumstances.  _(IRA s 52; Sixth Schedule)_
- **Filing** — Declared in the annual income tax return. Withheld at source (10%) by the paying entity for listed share transactions through the Colombo Stock Exchange (CSE) and reported to IRD.  _(IRA s 50–s 57; CSE Rules)_
- **Individuals and partnerships CGT rate** — 15% percent (On net capital gains from realisation of investment assets. INCREASED from 10% by IRA (Amendment) Act No. 11 of 2026, effective from the date of enactment (3 June 2026). Previously 10% since 1 April 2018.)  _(IRA (Amendment) Act No. 11 of 2026 s [CGT provision]; IRA s 50–s 57)_
- **Trusts, unit trusts, mutual funds and NGOs CGT rate** — 30% percent (On net capital gains from realisation of investment assets. INCREASED substantially from 10% by IRA (Amendment) Act No. 11 of 2026, effective from date of enactment (3 June 2026).)  _(IRA (Amendment) Act No. 11 of 2026)_
- **Companies CGT rate** — 30% percent (Taxed at the standard corporate income tax rate (not a separate CGT rate). Capital gains form part of assessable income and are subject to CIT at 30% (or applicable concessional rate if eligible).)  _(IRA s 59; First Schedule; IRD CGT page)_
- **Individuals and partnerships CGT rate** — 15% percent (On net capital gains from realisation of investment assets. INCREASED from 10% by IRA (Amendment) Act No. 11 of 2026, effective from the date of enactment (3 June 2026). Previously 10% since 1 April 2018.)  _(IRA (Amendment) Act No. 11 of 2026 s [CGT provision]; IRA s 50–s 57)_
- **Investment asset** — An investment asset is a capital asset held by the owner as part of an investment. Defined in IRA s 195 (definitions) and Chapter IV (s 36–s 57). Includes: land and buildings; membership interest in a company, partnership, or trust (listed and unlisted shares); security or other financial asset; option, right, or other interest in any of the above.  _(IRA s 36; s 195 (definitions); IRD CGT page)_
- **Land and buildings (non-primary residence)** — Any immovable property that is not the owner's qualifying primary/principal place of residence is an investment asset subject to CGT on realisation (sale, gift, transfer, etc.).  _(IRA s 36; s 45; Sixth Schedule)_
- **Condominium apartments** — Condominium units (other than qualifying primary residence) are investment assets subject to CGT.  _(IRA s 36)_
- **Listed and unlisted company shares and debt securities** — Shares in any company (listed on the Colombo Stock Exchange (CSE) or unlisted), debt securities, and other financial instruments are investment assets. Note: CSE withhold 10% CGT at source on listed share sales.  _(IRA s 36; CSE Rules)_
- **Motor vehicles (CLARIFIED EXEMPT from 1 April 2024)** — IRA (Amendment) Act No. 11 of 2026 clarifies that the disposal of any vehicle shall NOT be subject to income tax or capital gains tax, with effect from 1 April 2024. Retrospective relief.  _(IRA (Amendment) Act No. 11 of 2026)_
- **Machinery and equipment** — Qualifying business machinery and equipment may be investment assets if held as part of an investment rather than for active business use.  _(IRA s 36; IRD CGT Guidance)_
- **Primary / principal residence exemption** — The sale (realisation) of the owner's primary residence is exempt from CGT, subject to qualifying conditions: the property must have been used as the owner's principal place of residence and held for more than 3 years. Specific conditions prescribed by the IRD.  _(IRA s 45; Sixth Schedule; IRD CGT page)_
- **Donations to the Government or state universities** — Gifting or donating an investment asset to the Government of Sri Lanka or any local university formed under statute is a 'no-gain no-loss' event — deemed to be disposed of at net cost (no CGT). Effective from enactment of IRA Amendment Act No. 11 of 2026.  _(IRA (Amendment) Act No. 11 of 2026)_
- **Life insurance policy proceeds (NEW exemption)** — Amounts received from a life insurance policy upon death, maturity, or surrender are excluded from assessable income (effective from enactment of IRA Amendment Act No. 11 of 2026). Exclusion does NOT extend to amounts treated as employment income, business income, annuities, pensions, or superannuation benefits.  _(IRA (Amendment) Act No. 11 of 2026 s 52A)_
- **Movable personal use assets** — Certain movable assets used exclusively for personal use (below de minimis threshold) may be exempt.  _(IRA s 45; IRD CGT Guidance)_
- **Corporate reorganisations** — Transfers of assets in the context of qualifying corporate reorganisations (mergers, demergers, amalgamations) meeting specific conditions may be treated as tax-neutral events.  _(IRA s 48–s 51; IRD Reorganisation Rules)_
- **Net gain formula** — Net gain = Consideration received (or market value if IRD determines declared price is below market) MINUS cost of acquisition MINUS allowable improvement costs MINUS selling costs. Net gain is then subject to CGT at the applicable rate.  _(IRA s 36–s 44)_
- **Consideration vs market value** — If a tax official is of the opinion that the assessed value (certified by a professionally qualified valuer) does not reflect the true market value at the time of realisation, the tax official may substitute the market value as the consideration for CGT purposes.  _(IRA s 37)_

House (non-primary residence) in Rajagiriya bought 2019 for LKR 18m, sold 2026 for LKR 32m. Gain = LKR 14m. Under old 10% rate: CGT = LKR 1.4m. Under new 15% rate: CGT = LKR 2.1m.  _(Sunday Times 26 April 2026; taxcalculator.lk)_

- **Listed share transactions (CSE)** — CGT at 10% (now 15% post-amendment) is withheld at source by the Colombo Stock Exchange on listed share sales and reported directly to the IRD. The investor receives the net proceeds.  _(IRA s 84; CSE Rules; IRD CGT page)_
- **Payment deadline** — CGT on a realised gain must be paid to the IRD within ONE MONTH of the date of realisation. Failure to pay within 1 month: 14-day grace period (penalty = 1.5% of the CGT amount). After the 14-day period: additional penalties apply.  _(IRA s 50)_
- **Penalty – first 14 days after 1-month deadline** — 1.5% percent (Of the CGT amount, charged as a penalty for the 14-day extension period beyond the 1-month payment deadline.)  _(IRA s 50)_
- **Penalty – after 14-day extension period** — Further penalties under the IRA for continued non-payment. IRD may also commence enforcement action.  _(IRA s 163; IRD Penalty Schedule)_
- **Annual return disclosure** — Capital gains and CGT paid must also be reported in the annual income tax return filed with the IRD.  _(IRA s 95; IRD Return Filing Guidance)_
- **Withholding at source (CSE / non-resident transactions)** — For certain transactions (listed share sales via CSE; sale of property by non-residents), CGT or WHT is deducted at source by the paying entity (broker/purchaser) and remitted to the IRD.  _(IRA s 84; CSE Rules; IRD WHT Circular)_
- **Rate increase impact (10% → 15% for individuals)** — Individuals and partnerships who completed the realisation (sale, transfer) of investment assets BEFORE 3 June 2026 (date of enactment of IRA Amendment Act No. 11 of 2026) are taxed at the old 10% rate. Realisations on or after 3 June 2026 are taxed at 15%. Critical to record transaction date accurately.  _(IRA (Amendment) Act No. 11 of 2026)_
- **Valuation by qualified valuer** — To substantiate the cost basis (acquisition cost) and avoid IRD substituting a different market value, it is advisable to obtain a professionally qualified valuer's report at the time of realisation.  _(IRA s 37)_
- **TIN now required for property transfers (from 1 April 2026)** — From 1 April 2026, a TIN (Tax Identification Number) must be verified before permitting registration of a motor vehicle, building plan approval, or transfer of shares. Property-related transactions increasingly linked to TIN compliance.  _(IRA (Amendment) Act No. 11 of 2026)_

## Today's figures and who stands behind this skill

This file is an AI skill (tax rules your AI follows) from OpenAccountants, copied on 2026-07-13. Rates, thresholds and deadlines change. For the current version of this skill, its official sources and the named accountant (if any) who stands behind it, call `get_skill` with slug `sri-lanka-capital-gains-tax` on the OpenAccountants connector (https://www.openaccountants.com/connect), or read https://www.openaccountants.com/skills/sri-lanka-capital-gains-tax. If neither is available, confirm every figure against the official source pages cited above before relying on it.