The Inland Revenue (Amendment) Act No. 11 of 2026, certified on 3 June 2026, raised the capital gains rate for individuals and partnerships from 10% to 15%, and for trusts from 10% to 30%, “with effect from the date on which the provisions of section 1(2) come into operation”, which is the certification date. A sale completed on 2 June 2026 is taxed at 10%; one completed on 3 June 2026 or later is taxed at 15%. The IRD’s own summary pages had not yet been updated when this guide was written.
What counts as a capital gain
CGT applies to the gain on realising an investment asset: selling it, exchanging it, gifting it, or otherwise transferring ownership. Investment assets include land and buildings, shares in unlisted companies, and other capital assets held for investment. The gain is the amount you receive (or the market value, for a gift) less the asset’s cost, including improvement costs and the costs of buying and selling.
For an asset you owned before 1 April 2018, the cost is treated as its market value on 30 September 2017. Gains that built up before the tax existed are not taxed.
Capital gains tax rates
| Who realises the asset | Before 3 June 2026 | From 3 June 2026 |
|---|---|---|
| Individual | 10% | 15% |
| Partnership | 10% | 15% |
| Trust | 10% | 30% |
| Company | 30% | 30% |
First Schedule to the Inland Revenue Act No. 24 of 2017, as amended by section 36 of Act No. 11 of 2026.
CGT is a flat rate on the gain. It is not added to your other income and does not use the 6% to 36% bands that apply to salary or business income, and the Rs 1.8 million personal relief does not reduce it.
What is exempt
- Small gains. A resident individual pays no CGT where the gain on the asset does not exceed Rs 50,000 and total gains for the year do not exceed Rs 600,000.
- Listed shares. Gains on shares quoted on the Colombo Stock Exchange are exempt. Dividends are taxed separately through 15% withholding.
- Your home. The gain on your principal place of residence is exempt if you owned it for at least three years and lived in it for at least two of the three years before the sale.
- Gifts to the state. An asset gifted to the Government or a state university is treated as realised at cost, so no gain arises (section 46(3A), added in 2026).
Worked example: selling a block of land
You bought a bare block in Kadawatha in 2019 for Rs 6,000,000, paid Rs 200,000 in deed and survey costs, and sell it in August 2026 for Rs 11,000,000 with Rs 300,000 in broker and legal fees.
Gain = 11,000,000 − (6,000,000 + 200,000 + 300,000) = Rs 4,500,000.
CGT at 15% = Rs 675,000, due by 30 September 2026 (30 days after the end of August).
Had the sale completed in May 2026, the same gain would have been taxed at 10%: Rs 450,000.
Model your own sale, alongside rent, interest and salary, in the advanced tax calculator.
How to file and pay
- Work out the gain and keep the deed, valuation and receipts for buying, improving and selling.
- Log in to IRD e-services with your TIN and PIN and file the Capital Gains Tax return for the realisation. This is separate from your annual income tax return.
- Pay the tax using the payment voucher generated, at a bank or through online payment.
- Both the return and the payment are due within 30 days after the end of the month in which the asset was realised.
Late payment attracts the standard penalty of 20% of the tax plus interest at 1.5% a month. A CGT return results in a self-assessment only for the payment of the tax itself (section 95(2), clarified in 2026); the gain does not go back into your income tax computation.
What is not capital gains tax
- Profits from buying and selling property as a business (a developer or regular trader) are business income, taxed at your normal rates.
- Rent from a property is investment income taxed under the normal bands after the 25% rent relief; see the pillar guide.
- Stamp duty on the transfer is a separate provincial tax paid by the buyer, not CGT.