Sri Lanka Rental Income Tax Calculator — 2025/26

Rent earned by an individual from immovable property in Sri Lanka is taxed as investment income under § 6 of the Inland Revenue Act No. 24 of 2017. The IRD does not run a separate rental-tax ladder — instead the net rent is added to your other assessable income (salary, business, interest, other rents) and the whole pile is run through the standard personal income tax slabs for the year of assessment. This calculator applies that exact flow in seven steps:

1. Annualise the rent. Monthly gross × months rented. Vacancy months are excluded.
2. Apply the repair allowance. Section 7(2)(a) lets an individual deduct 25% of the gross rent as a deemed allowance for repairs and maintenance — no receipts required. If your actual receipted expenses exceed 25% you can elect the actual basis; the actual figure is capped at gross rent.
3. Build total assessable income. Net rent + every other rupee of assessable income for the year.
4. Apply personal relief. The first Rs 1,800,000 of total assessable is tax-free for resident individuals (Inland Revenue (Amendment) Act No. 2 of 2025).
5. Apply the PIT slabs.The remainder is taxed at the IRD's Y/A 2025/26 ladder:
   • Rs 0 → Rs 1,000,000: 6%
   • Rs 1,000,000 → Rs 1,500,000: 18%
   • Rs 1,500,000 → Rs 2,000,000: 24%
   • Rs 2,000,000 → Rs 2,500,000: 30%
   • Above Rs 2,500,000: 36%
6. Credit any WHT. A corporate or withholding-agent tenant must deduct 10% on the rent portion above Rs 100,000/month (§ 84). That WHT is creditable against your final PIT — the calculator either uses the figure on your TDS certificate or estimates it from the threshold rule, whichever is higher.
7. Attribute PIT to the rent.The calculator runs the bracket walk twice — once with rent and once without — and the difference is the rent's marginal share. This is the IRD-honest way to answer "how much is the rent costing me?" because rent always sits on top of other income at your highest applicable slab, not at the average rate of your total taxable base.

Why the marginal attribution matters

A common mistake is to take the total PIT and split it pro-rata — e.g. "rent is 50% of my assessable income, so it's 50% of my tax." That undercounts because rent goes on at the TOP of your slab, not at the average rate. If your salary already uses up the relief and the cheap 6% slab, then every rupee of net rent starts at 18% (or higher) — the calculator's rent-attributable PIT figure tells you the real cost of the lease before you sign it. Two landlords with identical Rs 1,800,000 of net rent can pay wildly different PIT depending on their other income.

Deemed 25% vs. actual receipted expenses

The 25% deemed allowance is a no-receipts shortcut. The actual basis adds up invoices for repairs, agent commissions, building insurance, property rates, interest on a loan taken to acquire the property, and depreciation on furniture and fittings. For a typical Sri Lankan landlord with no mortgage and only routine maintenance, actual expenses rarely beat the deemed 25%. The actual basis is worth choosing when you had a major roofing or rewiring year, when the property is mortgaged (interest can be sizable), or when you pay an agency to manage the property — those itemised costs together often exceed 25%. The calculator caps actual expenses at gross rent because § 7 only allows expenses incurred in deriving the income.

Withholding tax — the Rs 100,000 trap

Two things landlords often miss: (1) the 10% WHT only applies when your tenant is a withholding agent — a company, partnership, NGO, or other prescribed entity. A private individual renting your house for housing does not withhold. (2) The 10% is on the EXCESS over Rs 100,000 per month, not on the full rent. A Rs 150,000/month corporate lease yields only Rs 5,000/month of WHT (10% × Rs 50,000), not Rs 15,000. The calculator estimates the threshold-based WHT, compares it against the figure on your TDS certificate, and flags any mismatch so you can chase your tenant for a corrected certificate before filing.

Edge cases the calculator handles

Five edge cases are worth flagging. (1) Vacancy months — set "months rented" below 12 and the annual gross drops accordingly; the allowance and PIT scale with it. (2) Multiple properties — combine the monthly rents into the single input; the 25% allowance applies to the total. The proposal's case-C pensioner with two properties at Rs 40k + Rs 60k enters Rs 100k here. (3) Below-relief total — if net rent plus other income stays under Rs 1.8M, PIT is exactly zero and the calculator returns a clean zero rather than a tiny negative from floating-point arithmetic. (4) WHT-exceeds-PIT — surplus WHT is surfaced as a refund line; you claim it on filing. (5) Bracket boundary — at exactly Rs 1,000,000 of taxable income the PIT is exactly Rs 60,000; the next rupee taxes at 18%. The bracket walk is inclusive on the lower bound and exclusive on the upper, so there is no off-by-one ambiguity.

Three scenarios spanning the most common Sri Lankan rental setups, worked end-to-end. Each one is reproduced exactly by the calculator above — plug the inputs in and the working block should match line for line.

• Inland Revenue Act No. 24 of 2017 (as amended) — §§ 6, 7, 84
• IRD — Individual Income Tax Guide 2025/26
• IRD — Tax Chart Y/A 2025/26 (rate ladder cross-reference)
• Inland Revenue Department of Sri Lanka — official site

Calculator brackets, the 25% deemed allowance, and the Rs 100,000/month WHT threshold were last cross-checked against the IRD sources on 2026-05-17. The page is reviewed every April and within 48 hours of any Inland Revenue Amendment Act becoming law.