PickMe and Uber Driver Tax in Sri Lanka: Full Guide

Nobody hands you a payslip when you drive. There's no HR department, no APIT deduction, no letter at the end of the year telling you what you earned and what was taken off. Just a weekly payout into your account and a growing suspicion that at some point the Inland Revenue Department is going to want a word.

Here's the short version: yes, you owe tax on what you make driving, but you owe it on your profit, not your payouts. And after fuel, servicing, insurance and the platform's commission come off, a lot of drivers owe far less than they fear. Some owe nothing at all.

Everything below is for the Year of Assessment 2026/2027, which runs from April 1, 2026 to March 31, 2027.

Do I have to pay tax on my PickMe or Uber earnings?

Yes. Driving for a platform is a business, and business income is taxable.

The Inland Revenue Act defines business at Section 195 to include "a trade, profession, vocation or isolated arrangement with a business character however short the duration of the arrangement". It expressly excludes employment. You aren't PickMe's employee. You own or rent the vehicle, you pay for the fuel, you choose when to switch the app on, and you carry the loss when a day goes badly. That's a business, whether you think of it that way or not.

What you're taxed on is assessable income, which is your fares less the expenses of earning them. Then the Rs. 1,800,000 personal relief comes off that under Section 52 and paragraph 2(a)(v) of the Fifth Schedule, and whatever is left is your taxable income.

For 2026/2027 the rates in the First Schedule are:

The relief does a lot of work here. Your first Rs. 1,800,000 of profit is untaxed, and profit is a much smaller number than the total that passed through your account. If you want the general version of this, the income tax threshold in Sri Lanka is covered separately.

Does PickMe or Uber deduct any tax before paying me?

Almost certainly not, and this is the part that catches drivers out.

There is a 5% advance income tax on service fees under Section 85(1C). A company paying a resident individual for services has to withhold it once the payments pass Rs. 100,000 in a month. The Inland Revenue (Amendment) Act No. 11 of 2026 expanded the list of who it applies to considerably, adding photographers, electricians, cooks, personal trainers, brand ambassadors and two dozen more occupations to the doctors, engineers, lawyers and accountants already there.

Drivers are not on that list. Neither are delivery riders. The provision closes with "or any individual service provider as may be prescribed by regulation", which means the residual category needs a regulation to catch anyone new.

So nothing comes off before the money reaches you. The whole liability sits with you, undeducted, until you work it out and pay it. That's the opposite of a salaried worker, whose employer has been quietly handling it all year.

Which of my driving costs can I deduct?

Section 11(1) is the rule that matters, and its wording is doing something specific:

"In calculating a person's income from a business or investment for a year of assessment, expenses to the extent they are incurred during the year by the person and in the production of income from the business or investment, shall be deducted."

Those four words, "to the extent they are incurred", are the legal basis for splitting a mixed cost. Your phone isn't wholly a work phone and your car isn't wholly a work car, and the Act doesn't demand that they be. It lets you claim the share that earned you money.

For a driver, the deductible list is longer than most people expect:

• The platform's commission. Your income is the fare the passenger paid. What PickMe or Uber keeps is a cost of earning it. Present it either way and your profit is identical, but showing the gross fare with the commission as a separate expense matches your statement.
• Fuel, on the business-use share.
• Servicing, oil changes, tyres, brake pads, repairs, on the business-use share.
• Insurance and the revenue licence, on the business-use share.
• Phone and mobile data, on the business-use share.
• Car washes, seat covers, phone mounts, dashcams and similar running kit.
• Lease or hire payments if you're driving a vehicle you rent rather than own.
• Bank charges on the account you take payouts through.

One wrinkle on repairs. If you own the vehicle, repair costs run through Section 14 rather than Section 11, because Section 14 is the specific provision for repairs and improvements to a depreciable asset. It carries a percentage cap, but since April 1, 2021 that cap bites only on improvements, and Section 14(5) expressly excludes expenditure to maintain or repair an asset from the meaning of "improvement". Your repairs still come off in full.

What you cannot deduct is anything personal. Section 10(1)(b)(i) bars domestic expenses, and Section 197 spells out what that means, including "maintaining the individual, including in providing shelter as well as meals, refreshment, entertainment or other leisure activities".

Your lunch on shift is not deductible either, however long the shift was. That one genuinely stings, but it's what Section 197 says.

Can I claim a capital allowance on my vehicle?

This is the biggest number in the whole article, and it's also the least settled. Read this section carefully.

The starting rule is restrictive. Paragraph 2(4) of the Fourth Schedule says:

"No Capital allowance shall be granted to a person in respect of a road vehicle, other than (a) a commercial vehicle; (b) a bus or minibus; (c) a goods vehicle; (d) a heavy general purpose or specialised truck or trailer; or (e) a motor cycle."

If you ride a motorcycle, you're straightforwardly inside the exception. Motorcycles were added by Section 54 of the Amendment Act No. 10 of 2021 with effect from April 1, 2018. A delivery rider can write the bike down at 20% a year on the straight line method over five years, under paragraphs 2(2) and 2(3). Buy a bike for Rs. 900,000 and that's Rs. 180,000 a year of deduction, restricted to your business-use share.

If you drive a car, it turns on the phrase "commercial vehicle", which paragraph 2(5) defines as:

"(a) a road vehicle designed to carry loads of more than half a tonne or more than 13 passengers; or (b) a vehicle used in a transportation or vehicle rental business."

Limb (b) is the interesting one. A car carrying paying passengers on a ride-hailing platform looks a great deal like a vehicle used in a transportation business. If that reading holds, a driver's car qualifies for a capital allowance that an ordinary freelancer's car never could, which is a genuine and underappreciated difference between the two.

But here is the honest position. The Inland Revenue Act does not define "transportation business" anywhere. There is no definition in Section 195 and none in the Fourth Schedule. The Act defines "relevant transport business" in Section 73(2), but expressly limits that definition to Section 73, which is about international payments. The Amendment Act No. 11 of 2026 touched paragraph 2(5)(b) and did not add a definition.

So this is arguable, not decided. The wording points your way, the Act stays silent, and the sums involved are large enough that you should not simply help yourself to the deduction and hope. Get it confirmed by the IRD or a tax practitioner in writing before you claim, and keep the trip records that show the vehicle is genuinely being used to carry paying passengers.

Note that if you do claim a capital allowance on the vehicle, you're claiming against the cost of the asset itself. Our guide to capital allowances in Sri Lanka covers how the depreciation basis and balancing allowances work when you eventually sell. The related rules for ordinary private cars are in vehicle and fuel deductions for freelancers, where the answer is a flat no.

How do I work out my business-use percentage?

Everything above hangs on one number, so get it right and be able to prove it.

The method is kilometres. Business kilometres divided by total kilometres for the year. Drive 40,000 km in the year with 36,000 of them on trips or repositioning toward demand, and your business use is 90%.

Two readings give you the total: your odometer on April 1 and again on March 31. The business half comes from your platform, since both PickMe and Uber record trip distance in the app and in your downloadable statements. The gap between the two figures is your private driving.

Be realistic rather than optimistic. A figure like 100% invites a question you don't want, because almost nobody's vehicle is exclusively business. If the honest number is 78%, claim 78%.

How much tax would a full-time driver actually pay?

Take Nilanthi, who drives her own car on PickMe full time in Colombo through 2026/2027.

Her gross fares for the year come to Rs. 4,800,000, around Rs. 400,000 a month. PickMe keeps 20% in commission. She drove 40,000 km and her app statements show 36,000 of them were on trips or heading to pickups, so her business use is 90%. Her phone is about 70% work.

So her assessable income is Rs. 4,800,000 less Rs. 2,266,200, which is Rs. 2,533,800.

Now the relief. Rs. 2,533,800 less the Rs. 1,800,000 personal relief leaves taxable income of Rs. 733,800. That sits entirely inside the first slab, so her tax is 6% of Rs. 733,800, which is Rs. 44,028 for the year.

Rs. 4,800,000 passed through her hands and she owes Rs. 44,028, well under 1% of her gross fares. That gap is the single most useful thing for a driver to understand before panicking about a tax bill.

Now suppose her car does qualify as a commercial vehicle and she bought it for Rs. 6,000,000. The capital allowance is 20% of Rs. 6,000,000, restricted to 90% business use, so Rs. 1,080,000. Subtract that from her assessable income of Rs. 2,533,800 and she's at Rs. 1,453,800, which is below the personal relief. Her tax drops to nil.

That's the difference the capital allowance question makes, and it's why it's worth settling properly rather than guessing.

When do I have to pay, and how much each quarter?

Section 90(1) makes you an instalment payer if you derive or expect to derive assessable income from a business. There's no minimum in the section itself, so technically every driver is an instalment payer from day one. Whether you actually hand over money is a separate question, answered by the formula.

The four dates come from Section 90(2) and sit in the Act itself, so no circular can move them:

The amount is (A - C) / B.

• A is the tax payable on your taxable income for the immediately preceding year of assessment, before any credits.
• B is the number of instalments left including this one, so 4, then 3, then 2, then 1.
• C is tax already paid this year before the due date, including earlier instalments and any withholding credits.

Note what A is now. Until recently you filed a Statement of Estimated Tax under Section 91 and A came from your own estimate of the current year. The Inland Revenue (Amendment) Act No. 11 of 2026, certified on June 3, 2026, restricted Section 91 to years of assessment commencing before April 1, 2026. From 2026/2027 onward, A is simply last year's tax. If you want the detail on what changed and the paperwork attached to it, we covered the IRD circular on 2026/2027 quarterly instalments and the Statement of Estimated Tax separately.

For Nilanthi, whose 2026/2027 tax came to Rs. 44,028, next year's instalments start at Rs. 44,028 divided by 4, so Rs. 11,007 each quarter, adjusting as credits accumulate.

What if this is my first year, or I'm earning less than last year?

Both situations are common for drivers, and both have a route.

First year driving. If you had no taxable income in the preceding year, A is zero and the standard basis produces nothing to pay. But the Act's proviso lets you use an alternative: where the instalment payer has no taxable income for the preceding year, the estimated tax payable for the current year is used as A instead, calculated on the basis specified by the Commissioner General. The IRD's circular requires a declaration on its Attachment 1. The tax still falls due at the end of the year either way, so putting something aside as you go is sensible even if no instalment is technically demanded.

Earning less than last year. The same proviso covers you. Where you reasonably expect a lower taxable income this year, you can recalculate A on the Commissioner General's specified basis and declare it, with supporting figures showing the decline. For a driver this is a real scenario. A stretch off the road after an accident, a rise in fuel prices, or a quiet season can all push this year well below last year's figure, and paying instalments based on a better year you're not repeating is money out of your pocket for months.

Income that swings around is the normal condition of this job rather than an exception, and there's a fuller treatment in our guide to estimating quarterly tax on irregular income.

What happens if I miss a payment or skip the return?

The instalment penalties are above. The return is a separate obligation.

Section 93(1) requires a return of income "not later than eight months after the end of each year of assessment", which for a year ending March 31 means November 30. For 2026/2027, that's November 30, 2027.

Section 94(1)(a)(i) excuses a resident individual who "has no tax payable for the year". So if your profit after costs lands under the Rs. 1,800,000 relief and you have nothing else coming in, no return is required. Section 94(2) still lets the Commissioner General serve written notice demanding one, and if that arrives, the exemption stops mattering.

Two practical notes. You need a Taxpayer Identification Number to pay or file anything, and getting one is its own short process covered in our guide to the TIN in Sri Lanka. And if you're driving alongside a salaried job, your two incomes combine into one calculation with one relief between them, which changes the arithmetic considerably. That case is worked through in side hustle tax in Sri Lanka.

What records do I need to keep?

Every deduction above is a claim you may have to stand behind, and a deduction is only worth what you can evidence. Keep these:

• Platform statements, monthly, downloaded rather than screenshotted. They carry your fares, the commission taken, and trip distance in one document.
• Fuel receipts. Every one. This is usually the single largest deduction on the list.
• Service and repair invoices, including tyres and batteries.
• Insurance and revenue licence documents.
• Phone bills, and a note of how you arrived at the work share.
• Odometer photographs from April 1 and March 31.
• The vehicle purchase or lease agreement, if you're claiming or hoping to claim a capital allowance.

Our guide to tax record keeping in Sri Lanka covers how long to hold on to all of this.

What should I take away from all this?

You're running a business, the platform withholds nothing, and you're taxed on profit rather than payouts. For most drivers the resulting bill is modest, and for some it's nothing at all. But the obligation is yours whether or not anyone reminds you, so work the number out once, keep the receipts that support it, and pay on the four dates.