The Colombo Municipal Council, which administers the carefully tended Colombo General Cemetery, said demand for burial plots has surged while the cost has remained unchanged for a quarter-century.
"We have a serious space problem at the cemetery and demand is rising," Colombo Mayor A J M Muzamil told AFP.
"The rates are not reflective of market value and we want to correct that," Muzamil added.
Only Colombo's 550,000 residents are entitled to make the green, tree-lined cemetery their final resting place.
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"Some buy plots in the name of residents and the burial plot is actually used by someone from outside," Wijayamuni said.
"For the very wealthy, it is matter of prestige to own a plot at the Colombo General," Wijayamuni said.
The authorities plan to increase the price of a four-square-foot plot from USD 132 to USD 1,300.
"If we don't take some immediate action, we will soon run out of space," Wijayamuni said.
Officials hope the increase would deter people from reserving burial plots for outsiders, Wijayamuni said.
The cemetery contains the remains of British science fiction writer Arthur C Clarke, one of Sri Lanka's best-known foreign residents who died in 2008 at the age of 90.
Many of the other graves date from the period of British colonial rule of the palm-fringed tropical island.
The cemetery was commissioned in 1866.
A section of the cemetery is reserved for Commonwealth War Graves, maintained by Britain.
The cemetery is a tourist attraction in Colombo because of its huge trees, manicured lawns and carefully maintained flower beds. The area is also an oasis for birds.
While Buddhists, who form the majority of Sri Lanka's more than 20-million population, opt for both cremations as well as burials, most Christians choose burials.