For a car imported into Sri Lanka in 2026, the date your letter of credit (L/C) was opened can be worth more than a million rupees. Vehicles on an L/C opened on or before 15 May 2026 can be cleared without the 50% surcharge on Customs Import Duty, but only if the L/C and the shipment stay within strict conditions. This guide explains those conditions, taken directly from the gazettes, and what it costs to lose the exemption.
What the surcharge is
Customs Import Duty (CID) on most cars is 30% of the CIF value. The surcharge is an extra 50% of that duty, which makes the duty 45% of CIF. Because VAT (18%) and SSCL (2.5%) are charged on a base that includes the surcharge, the surcharge also increases those two taxes.
The three gazettes that set the L/C rules
| Gazette | Date | What it says about letters of credit |
|---|---|---|
| 2488/56 | 15 May 2026 | Surcharge from 16 May 2026 for three months. “This Order shall not be applied to Letter of Credit (L/C) opened on or before 15th May 2026” for the vehicles in its schedule. |
| 2488/69 | 17 May 2026 | From 18 May 2026, an L/C opened on or before 15 May 2026 loses the exemption if it is later amended to change the number of vehicles, a vehicle identification number, the vehicle description or its technical specifications. |
| 2501/88 | 13 Aug 2026 | Surcharge again from 15 August 2026 until 31 December 2026. L/Cs opened on or before 15 May 2026 remain exempt, except if the number of vehicles, identification number, description, technical specifications or expiry date is amended, or the shipped-on-board date on the bill of lading or airway bill is after 15 November 2026. |
Checklist: is your L/C still exempt?
Your vehicle can be cleared without the surcharge only if all of these are true:
- The L/C was opened on or before 15 May 2026.
- The L/C has not been amended to change the number of vehicles, a chassis or identification number, the description or the technical specifications.
- The L/C’s expiry date has not been amended.
- The vehicle’s shipped-on-board date on the bill of lading (or airway bill) is on or before 15 November 2026.
Amendments to other details are not in the gazettes’ lists. Even so, before you ask your bank for any amendment to an old L/C, ask your clearing agent whether it could cost you the exemption.
What losing the exemption costs
The surcharge itself is 15% of CIF (50% of a 30% duty). Add the VAT and SSCL charged on it (20.5% of the surcharge), and losing the exemption adds about 18.1% of the CIF value to your landed cost:
| CIF value (Rs.) | Surcharge (Rs.) | Extra VAT + SSCL (Rs.) | Total extra cost (Rs.) |
|---|---|---|---|
| 3,000,000 | 450,000 | 92,250 | 542,250 |
| 5,000,000 | 750,000 | 153,750 | 903,750 |
| 8,000,000 | 1,200,000 | 246,000 | 1,446,000 |
| 12,000,000 | 1,800,000 | 369,000 | 2,169,000 |
For a typical Rs. 5 million car, a single unnecessary amendment, or a ship that loads one day too late, can cost about Rs. 900,000.
Practical steps
- Plan the shipping date now. With the 15 November 2026 cut-off for the shipped-on-board date, confirm the vessel schedule with your exporter well in advance.
- Get details right before opening an L/C. Correcting the chassis number or specifications later is exactly the kind of amendment that removes the exemption.
- Keep the documents consistent. The bill of lading date is what Customs checks against the 15 November limit.
- Watch for the next gazette. The current surcharge order runs until 31 December 2026. What happens after that depends on a new order, so check before committing to shipments that arrive in 2027.
Other L/C rules worth knowing
- Under the Imports and Exports (Control) Regulations published with Gazette 2421/44 (January 2025), licensed banks must send the Controller General of Imports and Exports a daily report of every letter of credit opened for importing motor vehicles.
- News reports in February 2025 said usance (deferred-payment) letters of credit were prohibited for vehicle imports. Confirm the current position with your bank before you choose the L/C type.
- Bank charges, commissions and any cash margin for an L/C are set by your bank and change from time to time. Ask for them in writing.
Calculate your own vehicle
The PiXAMP import tax calculator includes the surcharge in every estimate. If your L/C qualifies for the exemption, your actual duty will be lower by the amounts above.
Sources
- Gazettes Extraordinary No. 2488/56 (15 May 2026), 2488/69 (17 May 2026) and 2501/88 (13 August 2026), Orders under Section 10A of the Customs Ordinance, on the Ministry of Finance gazette list.
- Imports and Exports (Control) Regulations, Gazette Extraordinary No. 2421/44 of 31 January 2025 (regulation text).
- Report on usance letters of credit: LankaBIZ, 1 February 2025.
This guide explains the gazettes in plain language and is not legal or financial advice. Confirm your position with your bank and a licensed clearing agent before amending an L/C or arranging shipment.