Who Has to File a Tax Return in Sri Lanka?

The law starts from "everyone files" and then carves out exceptions. So the useful question isn't "do I have to file?" — it's "am I excused?"

The default: you file

Every person has to file a return of income within eight months of the end of the year of assessment. The tax year 2025/2026 ended on 31 March 2026, so its return is due by 30 November 2026.

Then the law excuses specific people. As of the 2025/2026 year, you don't have to file if:

• You have no tax payable for the year. For most people that means total income under the Rs. 1,800,000 personal relief — broadly, under Rs. 150,000 a month across everything you earn.
• Your only income is a salary fully taxed through APIT — your employer deducted the right tax from every payslip, and you owe nothing further. Since April 2025 this also covers people who additionally earned up to Rs. 5,000 of bank interest.

Two catches sit on top of those exceptions:

• If the IRD has opened an income tax file for you, you keep filing — even a nil return — until the file is officially closed. Being excused in principle doesn't close a file that's already open.
• The IRD can always ask. A written notice requiring a return overrides the exceptions.

Where that leaves common situations

If you're self-employed and think your profit was under the threshold, be careful: the threshold applies after deducting your genuine business costs, and you'd need the records to show it. When in doubt, working the number out properly beats assuming.

Sold land or shares? Different return, shorter deadline

A gain on selling an investment asset — land, unlisted shares — has its own capital gains tax return, due within one month of the sale, and its own flat rate.

The rate changed part-way through 2026, so the date of sale decides it:

• Sold before 3 June 2026 — 10%. That covers the whole of 2025/2026, since the year ended 31 March 2026.
• Sold on or after 3 June 2026 — 15%. That falls in 2026/2027.

This trips up people who are otherwise under the threshold. The Rs. 1,800,000 relief doesn't shelter capital gains — the Act rules it out explicitly. Someone earning Rs. 100,000 a month who sold inherited land at a profit can owe capital gains tax, with a deadline measured in weeks, while owing no ordinary income tax at all.

What not filing actually costs

Until recently, the honest answer was "a penalty, eventually, maybe". The 2026 amendments changed the tone considerably.

The late filing penalty is the greater of:

• 5% of the tax owing, plus 1% for each month the failure continues, or
• Rs. 50,000, plus Rs. 10,000 for each month it continues

— capped at Rs. 400,000 per return. Note the second limb doesn't care what you owe: filing late costs money even when the tax itself is small.

Late payment stacks on top. Tax still unpaid two weeks after its due date attracts a 20% penalty (10% for missed instalments), plus interest at 1.5% for every month or part month — around 18 to 20% a year — running until you pay. Get an extension of time to pay approved before the deadline and the 20% penalty doesn't bite, though the interest still runs.

And since 2026, it can end in court. If you fail to file, the IRD can serve a written notice. Ignore it for 30 days and you can be prosecuted before a Magistrate — on conviction, a fine of up to Rs. 400,000, up to six months' imprisonment, or both. The notice step matters: nobody goes straight to court for a missed deadline. But the path from "never filed" to "summons" now exists, and the IRD's own notice says it will be publishing how it intends to use these provisions to improve compliance.

Missed earlier years? This is the year to fix it

Buried in the 2026 amendments is a genuinely generous, time-boxed offer: interest on late and underpaid tax is waived for years of assessment up to 2024/2025 — if the tax is paid in full by 2 December 2026. The same waiver covers surcharge tax and the debt repayment levy.

If you have unfiled years hanging over you, catching up before that date means paying what you owed, without the interest that usually makes old tax debts frightening. After it, the waiver is gone.

One caution on the fine print. The IRD's notice says the principal tax must be paid. The Act itself says the full tax and any applicable penalties. If you're clearing an old year that also carries a late filing penalty, settle both rather than assume the penalty can wait.

Having a TIN is not the same as having to file

Lots of people picked up a TIN recently. Since April 2026 a TIN certificate is required to open a bank account, register or renew a vehicle, register land or a business, transfer shares, get a building plan approved, or get a credit card. How officials verify it is still being specified, so enforcement is uneven in practice. Either way, the TIN itself doesn't create a filing obligation; the tests above do.

The nuance is the file, not the number. If the IRD has opened an income tax file for you — which registering for income tax as a tax type does — returns are expected until it's closed. If you have a TIN and aren't sure whether a file exists, that's worth finding out before November, not after a letter arrives.

Sometimes filing when you don't have to pays you

If your income was under the threshold but your bank deducted 10% tax from your interest, that's your money — and a refund is claimed by submitting a return. From Y/A 2025/2026, refunds up to Rs. 180,000 are processed within three months, before any audit, and you have 30 months from the end of the year to claim.

So the question isn't only whether you must file. It's which side of the line you're on — owing, owed, or genuinely excused. That's checkable in about a minute, and it's a much better place to start than the form itself.