What is the withholding tax rate on interest in Sri Lanka in 2025?

Advance Income Tax (AIT) on interest and discount is deducted at 10% from 1 April 2025. It applies to both residents and non-residents. For a resident individual it is creditable against the annual income tax return; for a non-resident it is a final tax.

How do I avoid AIT on my fixed deposit interest?

A resident individual whose total assessable income is at or below the personal relief of Rs 1,800,000 per year can give the bank a signed self-declaration. The bank then stops deducting the 10% AIT on that person's interest. If your income later exceeds the threshold you must inform the bank.

Is withholding tax on service fees a final tax or can I claim it back?

For a resident individual or partnership it is creditable, not final. The 5% AIT withheld on your invoices is set off against your year-end income tax liability — if too much was withheld, the balance is refunded after you file your return. For a non-resident the 14% is a final tax.

What is the WHT rate on rent paid to a resident individual?

10%, but only when the aggregate rent paid to that person exceeds Rs 100,000 per month. At or below that monthly threshold no AIT is deducted. Rent paid to a non-resident is taxed at 14% as a final WHT.

How much WHT is deducted on dividends in Sri Lanka?

Dividends are subject to 15% withholding tax, and it is a final tax. That means the dividend is not added to your assessable income and no further tax is due on it — you also cannot reclaim the 15%.

Does the Rs 100,000 threshold apply to every payment type?

No. The Rs 100,000 monthly-aggregate threshold applies only to rent and to service fees paid to resident individuals. Interest, dividends, royalties, and winnings are withheld from the first rupee with no threshold.

What is the difference between WHT and AIT?

They are the same mechanism — tax deducted at source when a payment is made. From 1 April 2025 the IRD uses 'AIT' (Advance Income Tax) for creditable deductions such as interest, rent, and service fees, while 'WHT' is still commonly used, especially for final taxes like dividends and non-resident payments. This tool labels each result as final or creditable so the distinction is clear.

When were these rates last verified?

The rates and thresholds on this page were last cross-checked against IRD Circular SEC/2025/E/02 and Public Notice PN/IT/2025-01 on 2026-06-19. They are reviewed each April (start of a new year of assessment) and after any Inland Revenue amendment.

Sri Lanka · Finance

Sri Lanka Withholding Tax (WHT/AIT) Calculator — 2025/26

See the withholding tax deducted at source on interest, dividends, rent, service fees, and royalties in Sri Lanka. Pick the payment type and amount to get the rate, the rupees withheld, the net you receive, and whether the tax is final or creditable. Uses IRD rates effective from 1 April 2025 (1 April 2025 – 31 March 2026). No signup, sources cited below.

By Induwara Ashinsana— Executive Director, Ryzera TechnologiesUpdated Jun 19, 2026

Withholding Tax (WHT / AIT)Y/A 2025/26

IRD rates · from 1 Apr 2025

Payment type

Payment frequency

Gross payment amount (Rs)

The gross amount before tax is withheld, for the frequency selected.

Quick presets

Recipient residency

Recipient type

Rate applied

10%

WHT deducted

Rs 20,000

Net received

Rs 180,000

Treatment

Creditable

Set off against your annual return

Interest / discount to a resident: 10% AIT, creditable against your income tax return.

Annualised summary

Gross / yr: Rs 200,000
WHT / yr: Rs 20,000
Net / yr: Rs 180,000

Cross-checked by net back-calculation (gross − net = WHT). Excludes DTAA treaty-reduced rates and partnership-distribution WHT.

The Rs 100,000/month threshold applies to rent and resident-individual service fees only. Rates and treatment are sourced from IRD Circular SEC/2025/E/02 and Public Notice PN/IT/2025-01.

How it works

When certain payments are made in Sri Lanka, the payer (the “withholding agent”) must deduct tax at source and remit it to the Inland Revenue Department on the recipient’s behalf. For Year of Assessment 2025/26 the operative rates come from IRD Circular SEC/2025/E/02 and Public Notice PN/IT/2025-01, both effective from 1 April 2025. The calculator applies them in four steps.

Look up the statutory rate for the payment type and residency. Interest and discount are 10%; dividends 15%; rent 10% (resident) or 14% (non-resident); service fees 5% (resident individual) or 14% (non-resident); royalties and winnings 14%.
Apply the threshold gate. For rent and for service fees to a resident individual, AIT is deducted only when the monthly aggregate exceeds Rs 100,000. At or below that figure the rate is gated to zero. For a yearly amount the tool divides by 12 to find the monthly equivalent.
Apply the self-declaration exemption. A resident individual whose total assessable income is at or below the personal relief of Rs 1,800,000 per year can declare to the bank to stop AIT on interest. Toggle the declaration on to model this.
Compute the figures. WHT = gross × rate, rounded to the cent; net = gross − WHT. Monthly inputs are multiplied by 12 for the annualised summary. Each result is flagged as a final tax (cannot be reclaimed) or creditable (set off against your annual return).

Payment	Resident	Non-resident	Treatment
Interest / Discount	10%	10%	Creditable
Dividend	15%	15%	Final tax
Rent	10%*	14%	Creditable
Service fee	5%*	14%	Creditable
Royalty	14%	14%	Creditable
Lottery / Gambling winnings	14%	14%	Final tax

* Rent and resident-individual service fees apply only above the Rs 100,000/month aggregate threshold. Every figure is independently cross-checked by a net back-calculation (gross − net must equal the WHT).

Worked examples

Fixed deposit interest — resident individual

Creditable

Interest of Rs 200,000/year on a fixed deposit
Statutory AIT on interest = 10% (no self-declaration on file)
WHT = 200,000 × 10% = Rs 20,000
Net interest = 200,000 − 20,000 = Rs 180,000
Creditable — set off against your annual income tax return
If total income ≤ Rs 1,800,000 and you self-declare, WHT = Rs 0

Freelancer service fee — resident individual, monthly

Creditable

Invoice of Rs 250,000/month to a Colombo company
250,000 > Rs 100,000 monthly threshold → 5% AIT applies
WHT = 250,000 × 5% = Rs 12,500
Net = 250,000 − 12,500 = Rs 237,500
Annualised: gross 3,000,000 · WHT 150,000 · net 2,850,000
Creditable — reclaim any excess when you file your return

Service fee at the threshold boundary (edge case)

No WHT

Invoice of exactly Rs 100,000/month, resident individual
Threshold is 'exceeds Rs 100,000' — 100,000 is not above it
Rate gated to 0% → WHT = Rs 0 · net = Rs 100,000
At Rs 100,000.01 the 5% kicks in → WHT = Rs 5,000
This off-by-one boundary is exactly where the gate flips

Dividend — final tax

Final tax

Dividend payment of Rs 500,000
Dividend WHT = 15% (final)
WHT = 500,000 × 15% = Rs 75,000
Net = 500,000 − 75,000 = Rs 425,000
Final tax — not added to assessable income, cannot be reclaimed

Frequently asked questions

Sources & references

Rates and thresholds were last cross-checked against these IRD sources on 2026-06-19. This tool does not compute DTAA treaty-reduced rates, partnership-distribution WHT, or the full annual income tax return — those are out of scope for v1. If a deduction on your statement differs from this tool, email me with the details and I’ll investigate.

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