Capital Gains Tax (CGT) Calculator Sri Lanka
Use this free calculator to estimate Capital Gains Tax (CGT) on land, property and other investment assets in Sri Lanka.
Selling a Land or Property in Sri Lanka? You May Need to Pay Capital Gains Tax (CGT)
Many landowners and property investors are unaware that profits earned from selling investment assets may be subject to Capital Gains Tax (CGT). Failure to calculate, report, and pay CGT on time can result in penalties, interest charges, and compliance issues with the Inland Revenue Department (IRD).
This guide explains how Capital Gains Tax is calculated, payment deadlines, tax type codes, period codes, supporting documents required, and common mistakes to avoid.
What is Capital Gains Tax (CGT)?
Capital Gains Tax is a tax charged on the gain arising from the sale, transfer, exchange, or disposal of an investment asset.
Common investment assets include:
- Land
- Buildings
- Commercial property
- Shares in companies
- Partnership interests
- Certain other investment assets
The tax is charged on the gain made from the transaction, not on the total sale value.
How is Capital Gains Tax Calculated?
Basic Formula
Capital Gain = Realization Value – Cost Base
Where:
Realization Value
- Sale price received
- Market value (where applicable)
Cost Base
- Original purchase price
- Stamp duty paid at acquisition
- Legal fees and acquisition costs
- Certain capital improvements supported by evidence
Example
Purchase Price of Land: Rs. 5,000,000
Improvement Costs: Rs. 500,000
Selling Price: Rs. 9,000,000
Cost Base = Rs. 5,500,000
Capital Gain = Rs. 9,000,000 – Rs. 5,500,000
Capital Gain = Rs. 3,500,000
CGT @ 10%
Tax Payable = Rs. 350,000
CGT Rate in Sri Lanka
The applicable Capital Gains Tax rate depends on the taxpayer category.
Before filing a return, taxpayers should verify the applicable rate under the current Inland Revenue Act and any amendments in force at the time of disposal.
Supporting Documents Required
To support a CGT calculation, taxpayers should maintain:
Acquisition Documents
- Purchase deed
- Sale and purchase agreement
- Stamp duty receipts
- Legal fee invoices
- Bank payment records
Improvement Cost Documents
- Contractor invoices
- Material purchase invoices
- Bank transfer records
- Municipal approvals (where applicable)
Disposal Documents
- Transfer deed
- Sale agreement
- Bank deposit records
- Valuation reports (if applicable)
Maintaining proper documentation helps support the declared cost base in the event of an IRD review.
Why Stamp Duty Evidence Matters
When claiming the acquisition cost of a property, supporting documents should be available to demonstrate the declared purchase value.
The purchase deed, stamp duty records, legal documents, and payment evidence should be retained as part of the taxpayer’s records.
Importance of Bank Payment Evidence
Taxpayers should maintain evidence of how the purchase and sale consideration was paid.
Examples include:
- Bank transfer confirmations
- Cheque copies
- Bank drafts
- Deposit slips
- Loan disbursement records
Where substantial amounts are involved, maintaining a clear audit trail can assist in substantiating the transaction.
Capital Gains Tax Payment Deadline
CGT Return and tax payment must generally be completed:
Within 30 days after the end of the month in which the asset was realized.
Example
Asset Sold: 15 June 2026
End of Month: 30 June 2026
Payment Due Date: 30 July 2026
Late payments may result in penalties and interest charges.
Capital Gains Tax Type Code
When making a payment to the Inland Revenue Department:
Tax Type Code: 23
Description: Capital Gains Tax
Capital Gains Tax Period Code
The payment period code is generally based on the month in which the asset was disposed of.
Format:
YYMM0
Examples:
| Disposal Date | Period Code |
|---|---|
| 15 January 2026 | 26010 |
| 20 March 2026 | 26030 |
| 15 June 2026 | 26060 |
| 10 December 2026 | 26120 |
Using the correct period code is important to ensure the payment is credited to the correct tax period.
How to Pay Capital Gains Tax
Taxpayers may pay CGT through:
Online Tax Payment Platform (OTPP)
Payments can be made electronically through participating banks using the IRD online payment system.
Bank Payments
Taxpayers may also make payments through authorized banks using the relevant tax payment details.
Information normally required includes:
- TIN Number
- Tax Type Code (23)
- Period Code
- Tax Amount
Common Mistakes Made by Property Sellers
Many taxpayers make the following mistakes:
- Losing acquisition documents
- Not keeping evidence of improvements
- Using incorrect tax period codes
- Missing payment deadlines
- Assuming CGT does not apply
- Failing to obtain professional advice before disposal
These issues can complicate the preparation of the CGT return and supporting calculations.
Free Sri Lanka Capital Gains Tax Calculator
MAPA Associates is developing a free online Capital Gains Tax Calculator that will help taxpayers estimate:
✓ Capital Gain
✓ Estimated CGT Liability
✓ Tax Type Code
✓ Period Code
✓ Filing Deadline
✓ Downloadable Calculation Report (PDF)
The calculator is intended as a preliminary estimation tool and should not replace professional tax advice.
Need Assistance with a Capital Gains Tax Return?
MAPA Associates (Chartered Accountants) provides:
- CGT Calculations
- Property Sale Tax Advice
- Cost Base Reviews
- Documentation Reviews
- Tax Return Preparation
- IRD Compliance Assistance
Whether you are selling land, a commercial property, or shares, obtaining professional advice before the transaction can help avoid costly mistakes.
Contact MAPA Associates
MAPA Associates (Chartered Accountants)
📞 0770 11 77 60
📞 0702 861 981
Frequently Asked Questions (FAQ) – Capital Gains Tax (CGT) in Sri Lanka
What is Capital Gains Tax (CGT) in Sri Lanka?
Capital Gains Tax (CGT) is a tax imposed on gains arising from the sale, transfer, exchange, or disposal of certain investment assets such as land, buildings, shares, and other qualifying assets.
What is the current Capital Gains Tax rate in Sri Lanka?
The applicable CGT rate depends on the category of taxpayer and the tax laws in force at the time of disposal. Taxpayers should verify the current rate before filing a return or making a payment.
How is Capital Gains Tax calculated?
Generally, Capital Gains Tax is calculated on the gain realized from the disposal of an investment asset.
Capital Gain = Realization Value – Cost Base
The cost base may include the purchase price and certain allowable acquisition and improvement costs supported by evidence.
Does CGT apply to the sale of land?
Yes. The sale of land held as an investment asset may be subject to Capital Gains Tax where a taxable gain arises.
Does CGT apply to inherited property?
The tax treatment of inherited property depends on the circumstances of the acquisition and disposal. Professional advice should be obtained before calculating any CGT liability.
What documents are required to calculate CGT?
Common supporting documents include:
- Purchase deed
- Sale deed
- Sale and purchase agreements
- Stamp duty records
- Legal fee invoices
- Improvement cost invoices
- Bank payment records
- Valuation reports where applicable
Can I include improvement costs in the CGT calculation?
Certain capital improvements may form part of the cost base if supported by adequate documentation and evidence.
Why should I keep proof of payment records?
Bank transfers, cheques, deposit slips, and other payment records help support the acquisition cost, disposal value, and improvement costs claimed in the CGT calculation.
What is the Tax Type Code for Capital Gains Tax?
The Inland Revenue Department Tax Type Code for Capital Gains Tax is:
Tax Type Code: 23
What is the CGT Period Code?
The period code is generally based on the month in which the investment asset was disposed of and is used when making a payment to the Inland Revenue Department.
How do I determine the CGT Period Code?
The period code generally follows the format:
YYMM0
Example:
- June 2026 = 26060
- July 2026 = 26070
- December 2026 = 26120
When must Capital Gains Tax be paid?
Generally, the Capital Gains Tax Return and payment must be submitted within 30 days after the end of the month in which the asset was realized.
How can I pay Capital Gains Tax?
CGT may generally be paid through approved banking channels and electronic payment systems made available by the Inland Revenue Department.
What information is required when making a CGT payment?
Taxpayers will normally require:
- Taxpayer Identification Number (TIN)
- Tax Type Code (23)
- Period Code
- Tax Amount Payable
What happens if I miss the CGT payment deadline?
Late filing or late payment may result in penalties, interest, and additional compliance obligations under the Inland Revenue Act.
Can I use the MAPA Associates CGT Calculator for tax filing?
The calculator is intended as an estimation tool only. The results should not be relied upon as a substitute for professional tax advice or formal tax computations.
Can MAPA Associates prepare my CGT Return?
Yes. MAPA Associates (Chartered Accountants) assists clients with:
- Capital Gains Tax calculations
- Cost base reviews
- Documentation reviews
- CGT Return preparation
- Tax compliance advice
- Inland Revenue Department matters
