Planning to sell a property, land, or shares in Sri Lanka? The Capital Gains Tax (CGT) rules are changing — and if you don’t plan ahead, you could face a significantly higher tax bill.
The proposed Inland Revenue Amendment Bill (February 2026) includes a major increase in CGT rates. Here’s everything you need to know.
What is Capital Gains Tax?
Capital Gains Tax is charged on the profit (gain) you make when you sell or transfer certain assets, known as “investment assets.” These include:
- Land and buildings
- Shares and securities
- Business assets
- Any other investment property
The gain is calculated as: Sale price – Purchase price – Allowable expenses = Capital Gain
What’s Changing in 2026?
Current Rates (Before Amendment)
| Type of Taxpayer | CGT Rate |
|---|---|
| Individuals & Partnerships | 10% |
| Trusts, Unit Trusts, Mutual Funds, NGOs | 10% |
Proposed New Rates (After Amendment)
| Type of Taxpayer | CGT Rate |
|---|---|
| Individuals & Partnerships | 15% |
| Trusts, Unit Trusts, Mutual Funds, NGOs | 30% |
This is a 50% increase in the CGT rate for individuals and a 200% increase for trusts and funds.
Practical Example: Selling Land
Let’s say you bought a plot of land in 2020 for Rs. 10,000,000 and are selling it in 2026 for Rs. 18,000,000.
| Amount | |
|---|---|
| Sale price | Rs. 18,000,000 |
| Purchase price | Rs. 10,000,000 |
| Legal & transfer costs | Rs. 500,000 |
| Capital Gain | Rs. 7,500,000 |
Under current rate (10%): Tax = Rs. 750,000 Under new rate (15%): Tax = Rs. 1,125,000
That’s an extra Rs. 375,000 in tax under the new rate.
Are There Any Exemptions?
Yes. The following are generally exempt from CGT:
- Sale of your primary residence (subject to conditions and holding period)
- Transfer of assets on death or inheritance
- Certain movable personal assets
- Gains below the applicable threshold
However, exemptions are complex and depend on specific circumstances. Always consult a tax advisor before relying on an exemption.
How This Affects Overseas Sri Lankans
If you own property in Sri Lanka and are planning to sell from abroad, be aware that:
- CGT applies regardless of your tax residency status
- The buyer may be required to withhold tax at source
- You’ll need to file a return in Sri Lanka to report the gain
- DTA provisions may apply if you’re resident in a treaty country
What Should You Do Now?
If You’re Planning to Sell Soon
Consider completing the sale before the Amendment Act takes effect to benefit from the current 10% rate. The exact effective date will be confirmed once the Bill is passed by Parliament.
If You’re Buying
Factor in the higher CGT rate when calculating your future investment returns.
Calculate Your Potential CGT
👉 Use TaxCalculator.lk to estimate your tax liability on any property or share sale.
Get Professional Advice
Capital gains calculations can be complex, especially with improvements, legal costs, and holding periods. Our team can help you:
- Calculate your exact CGT liability
- Identify available exemptions
- Plan the timing of your sale for optimal tax outcomes
- File the necessary returns
📩 Contact us at TaxCalculator.lk for a consultation
Tags: capital gains tax Sri Lanka 2026, CGT rate increase, property sale tax, selling land Sri Lanka, share sale tax, investment tax, TaxCalculator.lk
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