Quarterly Income Tax Instalments in Sri Lanka: IRD's Revised Method for 2026/2027
Sri Lanka's Inland Revenue Department has issued Circular No. SEC/2026/E/06, setting out how quarterly income tax instalments are calculated under Section 90 of the Inland Revenue Act, No. 24 of 2017 (as amended). It applies from the Year of Assessment 2026/2027.
Quick Answer
Instalments for 2026/2027 are payable on or before 15 August 2026, 15 November 2026, 15 February 2027, and 15 May 2027, each calculated as (A − C) ÷ B. The circular specifies how A is determined, through three methods: the Standard Basis, the alternative bases, and a request to the Commissioner. B and C are unchanged.
Quarterly Income Tax Instalment Due Dates for 2026/2027
| Instalment | Due date | Instalments remaining (B) |
|---|---|---|
| First | On or before 15 August 2026 | 4 |
| Second | On or before 15 November 2026 | 3 |
| Third | On or before 15 February 2027 | 2 |
| Fourth | On or before 15 May 2027 | 1 |
On or before 15 August 2026. Under the Standard Basis, any under payment, late payment or no payment attracts interest and a penalty.
How Is Each Instalment Calculated?
Instalment Payable = (A − C) ÷ B
- A: Tax payable on the taxable income, that is the gross income tax payable before deducting any tax credit, for the immediately preceding Year of Assessment
- B: Instalments remaining including the current one (4 for the first, 3 for the second, 2 for the third, 1 for the fourth)
- C: Total tax paid during the Year of Assessment prior to the instalment due date, including previous instalment payments and WHT or AIT credits already withheld or to be withheld
The three methods below all concern the calculation of A. B and C remain unchanged.
Method 1: Standard Basis
A is the tax payable on the taxable income of the immediately preceding Year of Assessment. For 2026/2027, that is the tax on your 2025/2026 taxable income.
- No documentation needs to be filed with the Commissioner-General for payments under this basis
- Any under payment, late payment or no payment attracts interest and a penalty
- If you are eligible for the standard method, you cannot use the alternative methods
Method 2: Alternative Bases
Strictly reserved for taxpayers who either had no taxable income in the immediately preceding Year of Assessment, or reasonably expect lower taxable income this year.
i. No preceding taxable income and no current assessable income expected. A is considered zero and no instalment is due, but Attachment 1 must still be submitted.
ii. No preceding taxable income but current assessable income expected. A is calculated by applying all taxing rules and the First Schedule rates to the preceding year's taxable income, disregarding any losses deducted or exemptions applied in that year. Attachment 1 is required.
iii. Previous income existed but a significant reduction is expected. You may recalculate the previous year's tax payable by excluding gains or profits from business or investment activities not expected to arise this year. Attachment 1 is required, with supporting calculations.
iv. Newly registered taxpayers. This covers a newly incorporated business, such as a private limited company in Sri Lanka that has just completed pvt ltd registration. Estimate your taxable income for the current year and apply the current year's provisions and rates. It applies for one Year of Assessment only, and Attachment 2 is required.
Method 3: Taxpayers Unable to Estimate
A taxpayer practically unable to calculate A under item ii or iii submits a written request outlining their valid restrictions to the Commissioner - Tax Policy and Legislation Unit, seeking another reasonable alternative method.
Which Method Applies to You?
| Your situation | Method | What to submit |
|---|---|---|
| Taxable income in the preceding Year of Assessment | Method 1 | Nothing filed with the Commissioner-General |
| No preceding taxable income, none expected this year | Method 2 (i) | Attachment 1, A is zero |
| No preceding taxable income, income expected this year | Method 2 (ii) | Attachment 1 |
| Previous income existed, significant reduction expected | Method 2 (iii) | Attachment 1, with calculations |
| Newly registered, first Year of Assessment only | Method 2 (iv) | Attachment 2 |
| Unable to calculate A under item ii or iii | Method 3 | Written request to the Commissioner |
Download the Circular and Attachments
Attachment 1 is Form No. SEC/2026/SA/01 and Attachment 2 is Form No. SEC/2026/SA/02, both titled "Declaration of Tax Amount Payable / Not Payable in Installments", printed at the end of the circular. They are submitted to the CDMU, Metro or the relevant Regional Office on or before 15 August of the year the first instalment falls due.
Download Circular No. SEC/2026/E/06 - PDF, Inland Revenue Department. This guide follows the revised circular of 6 August 2026.
Not sure which method applies, or how to prepare Attachment 1 or 2? Email support@bizadvisor.lk or call +94 77 106 6548.
Frequently Asked Questions
The first instalment is payable on or before 15 August 2026. The rest are due on or before 15 November 2026, 15 February 2027, and 15 May 2027.
Instalment Payable = (A − C) ÷ B. A is the gross income tax payable before deducting any tax credit for the immediately preceding Year of Assessment. B is the number of instalments remaining including the current one (4, 3, 2, then 1). C is the total tax paid during the year prior to the instalment due date, including previous instalments and WHT or AIT credits already withheld or to be withheld.
If you expect lower assessable income this year, you may recalculate the previous year's tax payable by excluding gains or profits from business or investment activities not expected to arise this year, and submit Attachment 1 with supporting calculations.
Newly registered taxpayers estimate their taxable income for the current Year of Assessment and apply the current year's tax provisions and rates. This applies for one Year of Assessment only, and Attachment 2 must be submitted.
Attachment 1 is Form No. SEC/2026/SA/01 and Attachment 2 is Form No. SEC/2026/SA/02, both titled "Declaration of Tax Amount Payable / Not Payable in Installments". They must reach the CDMU, Metro or the relevant Regional Office on or before 15 August of the year in which the first instalment is due.
Related Guides
- Online Company Registration in Sri Lanka - register your private limited company online
- Company Registration in Sri Lanka: Step-by-Step - the full pvt ltd registration procedure
- Corporate Tax Guide for Companies in Sri Lanka - rates and compliance
- WHT & AIT Guide for Sri Lankan Companies - how the credits in C work
Related Articles
Tradebook: Offline Invoicing App for Sri Lankan SMEs
Tradebook is a desktop invoicing app built for Sri Lankan small businesses. It works 100% offline, keeps your data on your own computer, and creates valid VAT tax invoices the way the IRD expects.
The State of Company Formation in Sri Lanka
First edition. Sector mix, ownership and foreign participation in new private limited companies. Registrations ran 4.9 times the 2020 level in 2025, half of new companies have a single owner, and foreign participation has recovered from its 2022 low. Free to download.
Sole Proprietorship vs Pvt Ltd in Sri Lanka
Why a private limited company is the stronger choice for most Sri Lankan businesses, compared against a sole proprietorship on liability, name protection, funding and continuity.