Sri Lanka Consolidated Acts

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Inland Revenue Act (No. 28 of 1979) - Sect 14

Exemption from income tax of certain capital gains

14. There shall be exempt from income tax -
(a) any capital gain arising on-
(i) the sale by any individual of any house constructed by him and used solely for residential purposes, such sale being the first sale of that house;
(ii) the sale of any house owned by any individual and used solely for residential purposes, if such individual has not sold on or after April 1, 1978, any house other than a house referred to in sub-paragraph (i) ;
(iii) the sale to a customer, of any property held by the vendor primarily for sale to customers in the ordinary course of his trade or business ;
(iv) the sale of any property which was used by any person for producing income in any trade, business, profession, vocation or employment carried on or exercised by him, in respect of which a deduction for depreciation has been allowed under section 23 of this Act or under section 10 of the Inland Revenue Act, No. 4 of 1963, or under section 11 of the Income Tax Ordinance ;
(v) the passing of any property subject to a trust from the trustee to any beneficiary under the trust;
(vi) the passing of any property belonging to the estate of a deceased person from his executor to any testate or intestate heir of the deceased ;
(vii) the passing of any property to any person, on the death of the owner of that property ;
(viii) the passing of any property occurring on the gift of that property by its owner to any other person ;
(ix) the passing of any property, being shares in any company incorporated in Sri Lanka with which an agreement has been entered into by the Greater Colombo Economic Commission under section 17 of the Greater Colombo Economic Commission Law, No. 4 of 1978, from the owner of that property to any other person by way of sale, gift or otherwise;
(x) change of ownership of any motor vehicle in respect of which a deduction for depreciation has not been allowed under subsection (1) of section 23 of this Act or under section 10 of the Inland Revenue Act, No. 4 of 1963, or under section 11 of the Income Tax Ordinance or of any household effect or other article of personal use (excluding jewellery) ;
(xi) change of ownership of a right to exploit a property occurring by a transfer of that right; and
(xii) the surrender of a life insurance policy and the surrender, transfer or extinction of a life interest.
(b) the aggregate amount of the capital gain of any person for any year of assessment which arises in respect of. movable property other than stocks, shares, debentures or debenture stocks, if such aggregate amount does not exceed two thousand rupees;
(c) the first five thousand rupees of the capital gain of any person for an year of assessment, if such person has a total assessable income for the three years of assessment immediately preceding that year of assessment which is less than the total of the allowances which under subsection (1) of section 30 of this Act, or under section 21 of the Inland Revenue Act, No. 4 of 1963, are required to be deducted from his assessable income in arriving at his taxable income for those three years of assessment.

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