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Explore the latest tax implications for key investment options in Sri Lanka, including Unit Trusts, Treasury Bills, Treasury Bonds, Fixed Deposits, Equities, and Debentures. Understand how Withholding Tax (WHT), Capital Gains Tax, and income tax apply to each asset class under the current Sri Lankan tax regulations. Make informed investment decisions with this concise tax comparison guide.

Investment Tax
Unit Trust Funds 10% Withholding Tax (WHT)*, Realized interest income liable for income tax*
Treasury Bills 10% Capital Gains Tax on Realized Gains
Treasury Bonds 10% Capital Gains Tax on Realized Gains
Fixed Deposits 10% Withholding Tax (WHT), Interest income liable for income tax*
Equity 0% Capital Gains Tax, 15% WHT on Dividends
Debentures 10% Capital Gains Tax on Realized Gains

According to the latest Sri Lankan tax regulations, equity investments are among the most tax-efficient, offering 0% Capital Gains Tax and only 15% Withholding Tax (WHT) on dividends.

Treasury Bills, Treasury Bonds, and Debentures are each subject to a 10% Capital Gains Tax on realized gains, reducing net returns.

Fixed Deposits and Unit Trust Funds are taxed at 10% WHT*, with their interest income also liable for additional income tax. However, in Unit Trust Funds, you are liable for the additional income tax only on Realized Earnings, i.e., only on the redemptions, and not on unrealized earnings. In Fixed Deposits, you are liable for the additional income tax at maturity.

For those aiming to maximize after-tax returns, equities remain the most efficient option, especially for long-term growth strategies.

*Unit Trust WHT is subject to different taxes applicable to asset classes the funds invest in, thus this value can change depending on the fund.

Income Tax For Monthly Income in Sri Lanka (LKR)

Income Tax Comparison
Taxable Monthly Income Tax
First 150,000/- 0 – Relief from Tax
150,000/- but not exceeding 233,000/- 6%
233,000/- but not exceeding 275,000/- 18%
275,000/- but not exceeding 317,000/- 24%
317,000/- but not exceeding 358,000/- 30%
More than 358,000/- 36%

Taxable Income Per Annum in Sri Lanka (LKR)

Taxable Income Tax Rate
Tax-free allowance up to LKR 1,800,000 Nil
Next LKR 1,000,000 6%
Next LKR 500,000 18%
Next LKR 500,000 24%
Next LKR 500,000 30%
Balance 36%

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