Quarterly Tax Payments in Sri Lanka: Your 2026/2027 Guide
If you're self-employed, freelancing, or earning income that doesn't have tax deducted at source, you can't wait until the end of the year to settle up with the Inland Revenue Department. Tax is paid in four quarterly instalments across the year.
That much hasn't changed. Almost everything about how you work out the amount has.
For the Year of Assessment 2026/2027, the Inland Revenue (Amendment) Act, No. 11 of 2026 rebuilt the instalment calculation. You no longer estimate this year's income and divide it into four. You take last year's tax, gross, and work from that. And the Statement of Estimated Tax that used to accompany your first payment is gone.
This guide covers who pays, when, how to calculate each instalment under the new basis, what to file, and what a late payment costs.
What changed about quarterly tax payments for 2026/2027?
Three things, and the first one is the big one.
The basis moved from forecast to history. Until 2025/2026, Item A in the Section 90(3) formula was your current estimated tax payable under Section 91 or 92. Section 16 of the 2026 Amendment Act replaced that. For any year of assessment commencing on or after April 1, 2026, A is the amount of tax payable on your taxable income in the immediately preceding year of assessment, calculated gross, before deducting any tax credit.
So for 2026/2027, A is your 2025/2026 tax. A number you already know, or will know shortly, rather than a guess about a year that hasn't happened yet.
The Statement of Estimated Tax stopped being required. Section 17 of the same Act amended Section 91 to apply only "for any year of assessment commencing prior to April 1, 2026". The obligation still sits in the statute book for earlier years. It just doesn't reach 2026/2027. Our article on what happened to the Statement of Estimated Tax covers that transition in more detail.
APIT moved inside the formula. There used to be a proviso letting employer APIT be deducted before you applied the formula. That proviso is now restricted to years before April 1, 2026. APIT is instead treated as an ordinary Division II withholding credit inside Item C.
The IRD set out how it wants all of this applied in Circular SEC/2026/E/06, which was issued on August 3, 2026, revised on August 6, and re-revised on August 12. The re-revised version governs, and it applies to 2026/2027 only. Our breakdown of the three versions of the quarterly instalment circular explains what moved between them.
Who has to pay quarterly tax instalments?
Under Section 90(1), you're an "instalment payer" if you derive or expect to derive assessable income during the year from a business, investment, or other income, or from an employment where the employer isn't required to withhold tax under Section 83 or 83A. In practice:
- Freelancers and consultants, including those billing overseas clients in foreign currency
- Self-employed professionals such as doctors, lawyers, and accountants in their own practice
- Business owners and sole proprietors
- Landlords and investors, where withholding doesn't already cover the liability
- Remote workers for foreign employers, since no local APIT deduction applies
- Anyone with several income sources where employment withholding falls short of the total
Two groups are outside the system entirely. If your only income is employment income subject to APIT, you make no instalments and file no credit schedule. The same holds if you have employment income plus rent or interest subject to Advance Income Tax, and the AIT deducted covers your remaining liability for the year.
Capital gains sit outside quarterly instalments altogether. The proviso to Section 90(1) says gains from the realisation of an investment asset "shall not be considered for the purpose of quarterly installments". They're paid on a transaction basis with their own return instead.
When are the 2026/2027 instalments due?
The Year of Assessment runs April 1 to March 31. Section 90(2) fixes the four dates:
| Instalment | Due Date |
|---|---|
| 1st | August 15, 2026 |
| 2nd | November 15, 2026 |
| 3rd | February 15, 2027 |
| 4th | May 15, 2027 |
These come from the Act, not from a circular, so no IRD guidance can move them. The pattern repeats every year: August 15, November 15, February 15, and May 15 of the following year.
How do I calculate each quarterly instalment?
Section 90(3) gives one formula:
(A - C) / B
A is the tax payable on your taxable income for the immediately preceding year of assessment, gross, before any credit is taken off.
B is the number of instalments remaining for the year, including the one you're paying. So 4 for the first quarter, then 3, then 2, then 1.
C is the total tax paid during the year before the instalment falls due. That means earlier instalments, plus tax withheld or to be withheld under Division II, plus amounts paid under Section 86(3) or (4).
Note the wording on withholding. Paragraph (ba), inserted by the 2026 Act, covers tax "withheld or to be withheld during the relevant year of assessment". Tax you expect to have withheld later in the year counts now, which is why a credit you haven't received yet still reduces your first payment.
Working out A
A is last year's tax, so you calculate it with last year's rules. For 2025/2026 that means the Rs. 1,800,000 personal relief and the five-band progressive scale. Neither changed for 2026/2027, so the numbers look familiar either way:
| Taxable Income | Tax Rate |
|---|---|
| First Rs. 1,000,000 | 6% |
| Next Rs. 500,000 | 18% |
| Next Rs. 500,000 | 24% |
| Next Rs. 500,000 | 30% |
| Balance | 36% |
For a full walkthrough of how the bands stack, see our income tax calculation guide.
A worked example
Take a freelancer whose 2025/2026 business income, after deductible expenses, came to Rs. 6,000,000, with no withholding on any of it.
| Step | Amount (LKR) |
|---|---|
| Assessable income 2025/2026 | 6,000,000 |
| Less: personal relief | (1,800,000) |
| Taxable income | 4,200,000 |
| First Rs. 1,000,000 at 6% | 60,000 |
| Next Rs. 500,000 at 18% | 90,000 |
| Next Rs. 500,000 at 24% | 120,000 |
| Next Rs. 500,000 at 30% | 150,000 |
| Remaining Rs. 1,700,000 at 36% | 612,000 |
| A (gross tax payable) | 1,032,000 |
Now run the formula across the year:
| Quarter | A − C | B | Instalment |
|---|---|---|---|
| Q1 (Aug 15) | 1,032,000 − 0 | 4 | 258,000 |
| Q2 (Nov 15) | 1,032,000 − 258,000 | 3 | 258,000 |
| Q3 (Feb 15) | 1,032,000 − 516,000 | 2 | 258,000 |
| Q4 (May 15) | 1,032,000 − 774,000 | 1 | 258,000 |
Four equal payments of Rs. 258,000. With no credits in play, the formula lands in the same place as dividing by four. The difference is that A came from a return, not a forecast.
The same example with credits
Now say the same freelancer expects Rs. 120,000 of AIT to be withheld on interest during 2026/2027. Because C picks up tax "to be withheld", that full Rs. 120,000 counts from the first quarter:
| Quarter | A − C | B | Instalment |
|---|---|---|---|
| Q1 | 1,032,000 − 120,000 | 4 | 228,000 |
| Q2 | 1,032,000 − (120,000 + 228,000) | 3 | 228,000 |
| Q3 | 1,032,000 − (120,000 + 456,000) | 2 | 228,000 |
| Q4 | 1,032,000 − (120,000 + 684,000) | 1 | 228,000 |
Rs. 912,000 in instalments plus Rs. 120,000 withheld comes to Rs. 1,032,000. The credits didn't reduce the tax, they just changed how much of it you hand over directly.
Don't wait for a withholding certificate before counting a credit. If you can reasonably expect the tax to be withheld during the year, paragraph (ba) lets it into C now. Leaving it out means overpaying every quarter and waiting until assessment to get it back.
If you're a freelancer paid in foreign currency for services used outside Sri Lanka, your gains and profits are taxed at a maximum rate of 15% under the First Schedule, in force since April 1, 2025. The 6% band you may have read about belongs to APIT Table 8, which the IRD says applies to resident employees working remotely for a foreign employer and expressly does not apply to independent service providers and freelancers, whose income is business income. Our guide to foreign employment income covers which side of that line you fall on.
What if last year isn't a fair guide to this year?
The prior-year basis breaks down in obvious cases. You had a strong year and then lost your biggest client. You had no taxable income last year at all. You only registered as a taxpayer this year.
The circular sets out alternatives, but they're gated. If you qualify for the standard prior-year basis, you have to use it. The alternatives are open only where you had no taxable income in the preceding year, or you reasonably expect lower taxable income this year. In those cases the estimated tax for the current year becomes A, calculated on the basis the Commissioner-General specifies.
How that plays out:
- No prior taxable income and none expected this year, for example where losses carry forward and absorb everything. A is zero, no instalment is due, but you still declare the position.
- No prior taxable income but income expected this year. You estimate the current year's gross tax.
- Prior income, but a significant fall expected. You recompute last year's tax excluding the business or investment profits you don't expect to repeat, and you attach calculations showing why.
- Newly registered taxpayers. You estimate the current year. This applies for one year of assessment only, after which the normal rules take over.
If your circumstances genuinely don't fit any of these, the circular allows a written request to the Commissioner setting out the restriction and asking for another reasonable method.
There's also a transitional concession worth knowing about. If you're on an alternative basis and your 2025/2026 computation wasn't finalised by August 15, the re-revised circular lets you use your final 2025/2026 Statement of Estimated Tax to work out the first instalment, then revise to the actual return for the second quarter. Only one revision is permitted. If your income is genuinely unpredictable quarter to quarter, our guide on estimating quarterly tax on irregular income goes deeper.
Already paying on the standard basis and your year is turning out worse than the last one? You can ask to switch. The request goes to the Central Document Management Unit with supporting details, on or before the last day of the month before the next instalment, so October 31, January 31, or April 30.
What do I have to send the IRD each quarter?
Less than you'd think, if you're on the standard basis.
A credit schedule. This is where you report the credits making up C. It goes to the Central Document Management Unit, or your Regional or Metro Office, on or before the last day of the month in which the instalment falls due. For 2026/2027 that's August 31, November 30, February 28, and May 31.
Attachment 1, only if you're on an alternative basis. Form SEC/2026/SA/01, with supporting calculations where you're claiming reduced income. Newly registered taxpayers use Attachment 2, form SEC/2026/SA/02. The re-revised circular set the submission deadline at November 30, 2026, which means you can upload it alongside your 2025/2026 Return of Income rather than rushing it in August. Uploads go to RAMIS under Upload Supporting Documents, titled in the format TIN_2627_INSAttachment1. Manual submission is still accepted.
Nothing at all, if your income is salary under APIT. No instalments, no credit schedule.
What does a late instalment actually cost?
Two separate charges, and they behave differently.
Penalty: 10%, after a 14-day grace period
Under Section 179(2), if you fail to pay all or part of an instalment within fourteen days of the due date, you're liable for a penalty of 10% of the tax due but not paid. Pay inside those fourteen days and no penalty applies. On our Rs. 258,000 example, missing the window costs Rs. 25,800 for a single quarter.
Interest: 1.5% per month, from day one
Interest is a different animal. Section 157(1) runs it from the due date, and Section 159(1) sets the rate at one and a half per cent per month or part month, computed monthly. There's no grace period, and a part month counts as a full month. Section 157(1) also says the due date is determined "without having regard to an extension of time under section 151", so even an approved extension doesn't stop interest.
Missing all four instalments on a Rs. 1,032,000 liability means Rs. 103,200 in penalties before interest is counted. Add compounding interest at 1.5% per month from each original due date and the gap widens every month you leave it. Because interest has no grace period and penalty does, paying something on the due date is always better than paying nothing.
Neither the 10% penalty nor the 1.5% interest rate changed under the 2026 Amendment Act. If you've already fallen behind, our guide on catching up after a missed quarterly payment walks through the arithmetic.
How do I actually pay?
Payments go to the Inland Revenue Department, online through the IRD portal, by bank deposit to designated IRD accounts, or in person at IRD offices. Each payment produces a Document Identification Number. Keep every DIN. You'll need them when you file, and they're your evidence that a quarter was paid on time.
What is the full 2026/2027 tax calendar?
| Date | What's due |
|---|---|
| August 15, 2026 | 1st instalment |
| August 31, 2026 | 1st credit schedule |
| November 15, 2026 | 2nd instalment |
| November 30, 2026 | 2nd credit schedule, and Attachment 1 if you're on an alternative basis |
| February 15, 2027 | 3rd instalment |
| February 28, 2027 | 3rd credit schedule |
| May 15, 2027 | 4th instalment |
| May 31, 2027 | 4th credit schedule |
| September 30, 2027 | Balance of tax payable on assessment for 2026/2027 |
| November 30, 2027 | Return of income for 2026/2027 |
Those last two dates catch people out, because the payment comes first. Section 82(2)(c)(ii) puts the balance of tax six months after the year ends, while Section 93(1) allows eight months for the return. So you settle the balance in September and file in November.
What should you do next?
If you filed for 2025/2026, look up your gross tax payable before credits. That single number is A, and it drives all four of this year's instalments. Divide it by four for the first payment, less any credits you expect during the year.
If last year was unusually good or unusually bad, check whether you qualify for an alternative basis before August 15, and file Attachment 1 by November 30 if you use one.
Then put the four dates in your calendar with a reminder a week ahead of each. Whether you track it in a spreadsheet, through a tax consultant, or with a tool like Taxable, the mechanics are now simpler than they were. Last year's tax, divided by the instalments remaining, less what's already been paid or withheld. The expensive part isn't the calculation. It's forgetting the date.
Frequently asked questions
Quick answers to common questions on this topic.
Who must make quarterly tax payments in Sri Lanka?
Under Section 90(1) of the Inland Revenue Act, you are an instalment payer if you derive or expect to derive assessable income from a business, investment, other income, or an employment where the employer is not required to withhold tax. That covers freelancers, self-employed professionals, business owners, landlords, and people working for foreign employers.
How is each quarterly instalment calculated for 2026/2027?
Each instalment is (A minus C) divided by B. A is the tax payable on your taxable income for the immediately preceding year of assessment, calculated gross before any tax credit. B is the number of instalments remaining including the current one, so 4, then 3, then 2, then 1. C is tax already paid or withheld during the year.
Do WHT and APIT credits reduce my quarterly payments?
Yes. For years of assessment starting on or after April 1, 2026, tax withheld or to be withheld under Division II, including employer APIT and Advance Income Tax, forms part of C in the instalment formula. Because the wording covers tax still to be withheld, your expected full-year withholding reduces every instalment, starting with the first.
Do I still have to file a Statement of Estimated Tax?
No. Section 17 of the Inland Revenue (Amendment) Act, No. 11 of 2026, operative from April 1, 2026, confined the Section 91 obligation to years of assessment commencing before April 1, 2026. For 2026/2027 there is no Statement of Estimated Tax to file, because your instalments are based on last year's actual tax instead.
What if my income this year is lower than last year?
You can apply an alternative basis. Where you had no taxable income last year, or you reasonably expect lower taxable income this year, the estimated tax for the current year becomes A. You must declare this on Attachment 1, form SEC/2026/SA/01, with supporting calculations where you are claiming reduced income.
What is the penalty for missing a quarterly tax payment?
A penalty of 10 percent of the unpaid instalment applies under Section 179(2) if you fail to pay within fourteen days of the due date. Interest is separate and has no grace period. It runs at 1.5 percent per month or part month, computed monthly, from the original due date under Sections 157 and 159(1).
Are capital gains included in quarterly tax instalments?
No. The proviso to Section 90(1) states that gains derived or expected to be derived from the realisation of an investment asset are not considered for the purpose of quarterly instalments. Capital gains tax is paid separately on a transaction basis, with its own return and payment date under Section 93.
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