Money From Family Abroad: Is It Taxable in Sri Lanka?

Every month, thousands of Sri Lankan households get a transfer from a son in Qatar, a sister in Melbourne, or a father on a contract in Dubai. And sooner or later someone asks the nervous question: is the tax office going to want a share of this?

Mostly, no. Tax on money sent from abroad in Sri Lanka depends on what the money is for, not where it comes from or how often it arrives. Family support isn't income you earned. But there's a clear line where it stops being a gift, and it's worth knowing exactly where that line sits.

Is money sent from abroad by family taxable in Sri Lanka?

Start with how the Inland Revenue Act, No. 24 of 2017 builds your tax bill. Section 3(1) says your taxable income is the total of your assessable income from four sources: employment, business, investment, and other sources. If a receipt doesn't belong to one of those four, it isn't part of your taxable income.

So where do gifts fit? The rules that list what counts as income mention gifts in three places, and each one is tied to an income-earning activity:

The words doing the work are "in respect of". A gift counts as income when it's connected to your job, your business, or your investments. A mother in Toronto sending money because she loves you isn't connected to any of them.

What if the money arrives every month?

This is the part most articles skip, so here's the honest version.

Section 8(1) has a catch-all. Income from "other sources" is your "gains and profits from any source whatsoever", not including profits of a casual and non-recurring nature. A regular monthly transfer is obviously recurring. So could it fall under Section 8?

The Act doesn't say. It is silent on whether voluntary family support is a "gain or profit" at all, and no exemption in Section 9 or the Third Schedule mentions family gifts or remittances either way.

When does money from abroad become taxable income?

The moment something is given in return. Here are the cases where a transfer from overseas genuinely is income.

A relative is paying you for work. Say Dilani designs marketing material for her cousin's company in Sydney, and the cousin transfers Rs. 150,000 after each job. That isn't a gift. She did work in return, so it's a service fee, and Section 6(2)(a) puts service fees into business income. The family link doesn't change a thing. She should treat it like any other foreign client payment, which our guide on the tax rate for freelancers' foreign income covers in full.

It's really your own salary, routed through someone else. Suppose you work remotely for an overseas employer, and your pay lands in a sibling's foreign account before they "send it home" to you. The money is still your employment income. Section 28 lets the Commissioner-General treat you as the real payee where you direct who gets paid, or the payer intends the payment to benefit you. Section 5(2)(g) also counts payments or transfers made to another person for your benefit as part of your employment income. If you're in this position, read our guide on foreign employment income tax.

Compare that with Nimali, whose brother works in Dubai and sends her Rs. 90,000 a month to help with their parents' care. Over a year that's Rs. 1,080,000. She does nothing in return, and it isn't her salary in disguise. It's a gift, and none of the Act's income rules pick it up.

Does it matter whether my relative abroad is a tax resident?

It matters for them, not for you.

Section 4 taxes residents on income from anywhere in the world. A non-resident is taxed only on income "to the extent that the income arises in or is derived from a source in Sri Lanka". Under Section 73(1)(a), a salary for work done abroad for a foreign employer doesn't have a Sri Lankan source. So a brother who has moved overseas and become non-resident usually pays no Sri Lankan tax on his foreign salary.

Either way, the tax position of what you receive stays the same. His salary is his income. What he sends you is a gift. If you're unsure where he stands, our explainer on who counts as a tax resident in Sri Lanka walks through the tests.

Will the IRD find out because my bank reports the transfer?

It can see it, yes. That doesn't change whether you owe anything.

• Section 121 requires every bank to keep records of all transactions with a client, including the client's identity.
• Section 123(2) lets the Commissioner-General require a bank to hand over your account details and statements.
• Section 123(5) says this works regardless of any bank secrecy law or duty of confidentiality.
• Section 123(8), added by Amendment Act No. 4 of 2023, requires financial institutions to send information on financial transactions to the Commissioner-General regularly, in whatever form is prescribed.

So assume the transfers are visible. But visibility is not a tax rule. Tax depends on what a payment is, not on who can see it. A gift reported by your bank is still a gift.

What visibility does change is the conversation. Section 126(3) says the IRD isn't bound by what you put in your return and can work out your tax from any information it has. If large, regular inflows appear next to a modest declared income, you may be asked to explain them. A clean explanation is simple when you've kept the right things.

What should I keep to show it was a gift?

Nothing in the Act lists "gift paperwork" for someone who only receives family support. But a small file costs nothing and answers every question the IRD could reasonably ask.

1. The bank's inward remittance advice for each transfer, showing the sender's name.
2. A short note of the relationship and purpose. "From my brother, monthly support for our parents' care." One line is enough.
3. Messages that show the intent, such as a WhatsApp message saying the money is for the school fees.
4. For large one-off gifts, a signed letter from the sender saying it's a gift and nothing is expected in return.

How long? Section 120(6) sets five years from the date of the transaction for anyone required to keep records under the Act, and longer if an assessment or dispute is still open. That rule is aimed at people in business or investment, or who must file a return. Even if it doesn't bind you, five years is a sensible habit.

Is there a gift tax in Sri Lanka?

The Inland Revenue Act has no separate tax on receiving a gift. The only question it asks is whether a receipt is income, and a genuine family gift isn't.

Gifts do show up elsewhere in the Act, just not as a charge on the person receiving money. For instance, Section 46 treats giving away an asset as a realisation by the giver for capital gains purposes, with special no-gain treatment when an individual transfers an interest in land or a building in Sri Lanka to a close relative such as a child, spouse, parent or sibling. That's about the giver disposing of an asset, not about you receiving cash.

So if your family abroad is helping you out, you can stop worrying about the tax on it. Save your attention for the case that really matters: money that arrives because you did something for it. That's income, whoever sends it. For how that income gets converted to rupees, see our guide on exchange rates for foreign income.