The Social Security Contribution Levy (SSCL) was introduced by the Social Security Contribution Levy Act, No. 25 of 2022 and has been subsequently updated by several amendments, including the most recent Amendment Act, No. 24 of 2025. It is a tax imposed on the liable turnover of specific businesses to support social security initiatives.
1. Scope of Liability
The levy applies to “taxable persons” engaged in the following activities in Sri Lanka:
- Importers of any article.
- Manufacturers of any article.
- Service Providers of any description.
- Wholesalers and Retailers (including importers who sell their imported goods).
2. Registration Thresholds
Businesses must register with the Inland Revenue Department if their aggregate turnover meets these limits:
- Quarterly Threshold: Exceeds Rs. 15 million for any quarter.
- Annual Threshold: Exceeds Rs. 60 million for four consecutive quarters.
Note: Registration must be done within 15 days of meeting these thresholds.
3. Chargeability & Rate
- Standard Rate: 2.5% on the Liable Turnover.
- Calculation Base: The “Liable Turnover” is calculated as a percentage of the total turnover depending on the business category:
| Business Activity | Liable Turnover (% of Turnover) |
| Importation of Articles | 100% |
| Manufacturing | 85% |
| Services (General) | 100% |
| Wholesale & Retail (Standard) | 50% |
| Wholesale & Retail (Registered Distributors) | 25% |
4. Calculation Scenarios
The levy is calculated by applying the 2.5% rate to the specific Liable Turnover of the business.
- Manufacturer: If a manufacturer sells goods for Rs. 1,000,000.
- Liable Turnover (85%): Rs. 850,000.
- SSCL Payable (2.5%): Rs. 21,250.
- Retailer: If a shop has a turnover of Rs. 1,000,000.
- Liable Turnover (50%): Rs. 500,000.
- SSCL Payable (2.5%): Rs. 12,500.
5. Payment and Return Due Dates
SSCL follows an accrual basis and must be paid in monthly installments:
- Monthly Payments: Due by the 20th day of the following month (e.g., January’s levy is due by Feb 20th).
- Quarterly Returns: A formal return must be submitted by the 20th day of the month immediately following the end of the quarter.
6. Penalty for Non-Compliance
Failure to comply with the Act leads to significant financial penalties:
- Default in Payment: An immediate 10% penalty on the amount in default, plus an additional 2% per month for as long as it remains unpaid.
- Failure to Furnish Returns: A penalty not exceeding Rs. 50,000.
- Fraud/Evasion: Conviction can lead to a fine equal to double the amount evaded and/or imprisonment for up to 6 months.
7. Key Exemptions Certain goods and services are excluded from the SSCL to protect essential sectors, encourage exports, and avoid double taxation on specific financial activities.
Key Exempted Articles (Goods)
- Essential Food & Commodities: Fertilizer , L.P. Gas , pharmaceuticals , and rice manufactured from locally produced paddy.
- Agricultural Produce: Fresh milk, green leaf, tea, cinnamon, and rubber (latex, crepe, or sheet rubber).
- Fuel: Petrol, diesel, and kerosene. Effective July 1, 2025, the exemption was expanded to cover these fuels broadly , whereas it previously focused primarily on filling station sales.
- Export-Oriented Goods: Any article exported by the manufacturer or raw materials imported specifically for the manufacture of export goods.
- Specialized Equipment: Equipment used by differently-abled persons and motor vehicles liable to Excise Duty upon importation.
- Tax-Specific Exclusions: Articles subject to the Special Commodity Levy (SCL) and goods sold at duty-free shops.
Key Exempted Services
- Public Utilities & Healthcare: Medical services , supply of water , and the generation/supply of electricity (subject to specific provider criteria).
- Transportation: General transportation of goods and passengers. As of December 2025, this includes services related to international transportation by container terminal operators.
- Financial & Insurance Services:
- The business of life insurance.
- Financial services provided by persons already liable to Value Added Tax (VAT) at the rate of 20.5%.
- Foreign Currency Earners: Services provided to persons outside Sri Lanka where payment is received in foreign currency and remitted through a bank (e.g., inbound tours or internet-based support).
- Government & Social Security: Services provided by Government Departments, Ministries, Local Authorities , and the Central Bank of Sri Lanka.
- Retirement Funds: Services rendered by the Employees’ Trust Fund, Provident Fund, Pension Fund, and Gratuity Fund.
Important Note: The exemption for machinery or equipment imported for the Ceylon Electricity Board (CEB) to supply electricity was restricted to agreements made prior to February 18, 2025.
Stay ahead of Sri Lanka’s changing tax landscape with Lanka Tax Club.
For further details and assistance with your tax matters, please contact us at info@lankataxclub.lk