The SSCL registration threshold is set to decrease from Rs. 15 million to Rs. 9 million per quarter starting April 2026, marking a significant change in Sri Lanka’s Social Security Contribution Levy framework and affecting businesses across multiple sectors.
SSCL registration threshold changes and motor vehicle levy revisions take effect April 2026
A new legislative update is set to reshape the Social Security Contribution Levy (SSCL) framework in Sri Lanka. Following the Budget 2026 proposals, a Bill to amend the Social Security Contribution Levy Act No. 25 of 2022 was gazetted, introducing notable changes including a lower registration threshold and revisions to the levy treatment for motor vehicles.
The Bill, published in the Gazette Extraordinary on 27 February 2026 and issued on 3 March 2026 by the Minister of Finance, Planning, and Economic Development, establishes a quarterly turnover threshold reduction for businesses. Effective 1 April 2026, companies will be required to register for SSCL if their quarterly turnover exceeds Rs. 9 million, a decline from the previous Rs. 15 million. Similarly, the annualized threshold calculated over four quarters will drop from Rs. 60 million to Rs. 36 million.
Businesses exceeding the revised threshold must apply for registration within 15 days, ensuring compliance under the amended legislation. A transitional provision further allows taxpayers who now fall within the revised limits to be treated as compliant if they submit the prescribed application to the Commissioner General of Inland Revenue within 15 days from the Act’s commencement.
The Bill also introduces de-registration provisions for entities whose turnover does not surpass Rs. 36 million over four consecutive quarters, effective from 1 April 2026. This adjustment aims to simplify compliance for smaller businesses while maintaining oversight over larger entities.
A key aspect of the amendment concerns the motor vehicle levy. Currently, imported motor vehicles enjoy an exemption from the SSCL at the import stage. From 1 April 2026, this exemption is proposed to be removed, bringing imported vehicles under the standard SSCL regime. At the same time, the Bill provides a compensatory measure by exempting turnover generated from the wholesale and retail sale of motor vehicles from the levy, effectively shifting the taxation point from import to domestic sales.
Industry experts, including KPMG Sri Lanka, have noted that while the Budget 2026 announcement outlined these measures, the Bill does not explicitly address transitional arrangements for vehicles imported before 31 March 2026 that remain in inventory. This gap may require businesses to closely monitor the implementation rules issued by the Commissioner General of Inland Revenue.
These amendments are part of the government’s broader effort to refine the SSCL framework, enhancing clarity, compliance, and revenue efficiency. By lowering the SSCL registration threshold, smaller businesses are formally incorporated into the levy system, ensuring broader participation while balancing administrative feasibility. For motor vehicle dealers and importers, the shift in levy treatment signals a strategic change in how the sector will be taxed moving forward.
The recalibration of thresholds and levy applications reflects a continuing evolution of Sri Lanka’s fiscal policy. Businesses affected by these changes will need to review their turnover projections, registration obligations, and inventory practices to align with the new requirements. Furthermore, proper planning around the transitional provisions and de-registration rules can minimize compliance risks and potential penalties.
As the SSCL regime adapts to these changes, timely communication from the Inland Revenue Department, coupled with proactive engagement from affected entities, will be crucial in ensuring smooth implementation. The government’s approach underscores a move toward more comprehensive coverage of social security contributions, while also balancing sector-specific exemptions to avoid undue economic disruption.