The Inland Revenue Act No.24 of 2017, taking effect from April 1, 2018 introduces Capital Gain Tax (CGT) on gain from the realization of investment assets. For income tax purposes, capital gain tax is treated as an investment income and it is charged in section 7(2) b as,
“Gain from realization of investment assets as calculated under chapter IV (section 36-51)”
Capital Gain Tax is a tax on gains realized on the transfer of ownership including sale, exchange, transfer, distribute, cancel, redeem, destroy, loss, expire, expropriate or surrender of an investment asset. The only gain that should be subject to CGT will be the gain on the realization of an investment asset.
Capital gain is calculated as the difference between
the consideration received and the cost of the investment asset at the time of realization.
Where resident individual’s gain from realization of an investment asset that does not exceed Rs.50, 000/- and the total gains does not exceed Rs.600, 000/- in the year of assessment.
The investment asset held by a person as at 30.09.2017 cost of asset is equal to the market value of the asset at that time.
A loss from realization of investment asset will not be deductible against any gain from realization investment asset.
Every Liable person shall file CGT return and make payment after the realization of investment asset.
Inland Revenue Department, Sri Lanka,
Chittampalam A. Gardiner Mawatha, Colombo 02.
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