Still in force (Checked by us: 27 October 2026)
Retirement money Still in force2 min read
How much tax on gratuity and ETF money when you retire?
Based on: IRD Tax Chart 2025/26, 28 August 2025 · Checked by us: 27 October 2026
In one line
For retirement payments like gratuity, commuted pension and ETF money, the first Rs. 10 million is tax-free.
Key points
- First Rs. 10,000,000 — 0%; next Rs. 10,000,000 — 6%; the rest — 12%.
- This covers gratuity, commuted pension, ETF money, and loss-of-office compensation under an approved scheme.
- Money from an approved or regulated provident fund is not taxed.
- Pension or retirement benefits paid by the Government are not taxed.
- Compensation schemes that are not approved are taxed at normal rates.
What you should do
- Add up your retirement payments in our retirement benefits calculator.
- Ask your employer whether tax was deducted using APITAdvance Personal Income TaxTax your employer deducts from your salary every month. See all tax words Table 3.
- Ask your provident fund whether it is approved.
Retirement payment bands
| Total retirement payments | Rate |
|---|---|
| First Rs. 10,000,000 | 0% |
| Next Rs. 10,000,000 | 6% |
| Above Rs. 20,000,000 | 12% |
Source
Was this clear?
This is not the Inland Revenue Department (IRD) website. Information here is a simple general explanation, not tax advice. Check ird.gov.lk or a qualified professional before you act.