Stamp duty on a transfer of land in Sri Lanka is 4% of the consideration, and that rate is the same in all nine provinces. Most explanations stop there. It is the wrong place to stop, because the rate is the settled part of the calculation and the base is not.
The rate is fixed. The base is the variable.
Duty is charged on the higher of two figures: the consideration recorded on the deed, and the value the Provincial Department of Revenue has assessed for that property. Whichever is larger is the number the percentage is applied to.
That single rule explains almost every unpleasant surprise on a completion statement. Two buyers can pay exactly the same price for two properties in the same province and receive different bills, because the assessments sitting behind the two properties are different.
The assessment is not something you negotiate, and it is not calculated from your deed. It is the provincial department’s own figure, held independently of your transaction and unaffected by your reasons for paying what you paid.
What that does to a discount
A price below the assessment does not carry a duty below the assessment. This is where a good deal turns into an unbudgeted one.
The pattern repeats in three situations. A sale between relatives at a family price. A sale where the seller needs the money quickly and prices to move. A property that has been sitting unsold and finally goes at a figure the market talked down. In each case the buyer has agreed a low number and the province is holding a higher one.
| Agreed price | Assessed value | Duty charged on | Duty at 4% |
|---|---|---|---|
| LKR 30,000,000 | LKR 26,000,000 | LKR 30,000,000 | LKR 1,200,000 |
| LKR 30,000,000 | LKR 34,000,000 | LKR 34,000,000 | LKR 1,360,000 |
| LKR 30,000,000 | LKR 45,000,000 | LKR 45,000,000 | LKR 1,800,000 |
Those figures are illustrative, chosen because the arithmetic is easy to follow. The point they make is not. Three buyers, one price, and a spread of LKR 600,000 between the cheapest and the dearest outcome, decided by a number none of them set.
Who pays it
The buyer, on a sale of land. That is how the provincial revenue departments administer the charge.
Parties do sometimes agree privately about who reimburses whom for a cost like this. That agreement is a matter between them and belongs in a document drafted by somebody qualified to draft it. It does not change who the department looks to.
When it has to be paid
Before the deed is registered at the Land Registry. Registration is the last step of the transaction, and duty is a precondition of it rather than a consequence.
So this is money that has to exist on the day. It is not an invoice that follows the keys. If you are borrowing to buy, ask the bank in writing what the facility covers and what it excludes, and ask early enough that the answer can still change your plans.
Where the money goes
To the relevant Provincial Council, not to central government. Duty on land is a devolved revenue, which is why the assessed value you are measured against comes from a Provincial Department of Revenue rather than from a national office, and why the counter you deal with is a provincial one.
It also explains why the assessment is worth checking rather than assuming. Assessments are held provincially, and they are not the same instrument as a published index, but the direction of travel in land values is public information. The Central Bank of Sri Lanka publishes a Land Valuation Indicator, and its Colombo District reading rose 10.6% across the second half of 2025, measured against the same period in 2024. That is a gauge of land values in one district, and it cannot be used to predict any particular assessment. What it tells a buyer is that land values have been moving, and that a duty estimate resting on a guess about the assessment rests on the least reliable input in the whole calculation.
The assessment is not a view on what the property is worth to you
One confusion is worth clearing up, because it sends buyers down the wrong road. The assessed value exists to determine a tax. It is not an opinion about what the property should sell for, it is not produced for your benefit, and it is not evidence you can take to a bank or a seller.
Three different numbers get muddled here, and they come from three different places. The assessment comes from the province and decides duty. A valuation in the chartered sense is prepared by a qualified valuer and is the version a lender or a court will expect to see. A market appraisal from an agency estimates what a property should achieve in the market as it stands, useful for pricing a sale, and not a stand-in for either of the other two.
Being clear about which number you need saves a good deal of wasted effort. If what you need is a chartered valuation, an agency cannot give you one, and we refer that work out.
The 3% band, and why published figures differ
You will find the same duty described two ways. The provincial position is 4% of the consideration. Several legal guides, CB Law Chambers and Kaluthanthri Legal among them, set it out in bands: 3% on the first LKR 100,000 of value, then 4% on everything above that.
The gap between the two readings is one percentage point applied to LKR 100,000, so at most LKR 1,000. Against a duty measured in hundreds of thousands, that is a rounding difference rather than a disagreement worth resolving in an article. We mention it because you will meet both figures, and because the reconciliation is not yours to do. Your notary computes the assessable value and the duty payable on it, and that computation is the one that has to be right.
What the 4% does not cover
Nothing but the duty. Notary fees, registration, a current survey and a title search are separate costs from separate parties, and none of them is included in the percentage. A transfer budgeted as “four per cent plus a bit” is a transfer budgeted short. Our itemised breakdown of everything a purchase costs on top of the price sets the list out line by line.
Take the assessment to a notary before you take the price to a seller
This article states the position as the provincial revenue departments administer it. It is not legal advice, and the specific duty on a specific deed is a question for a notary or an attorney-at-law, who is also the person able to establish the assessed value before you are committed to a figure.
A1 works across seven districts and acts for whichever side of a sale you are on. If you want the cost of a transfer set out before you make an offer rather than after, talk to us. We will walk the figures through with you, say which of them are firm, and tell you at what point the notary has to take over.