Customs department spokesman Leslie Gamini said the issue carrying a photo of a prominent Myanmar monk under the headline: "The Face of Buddhist Terror" would be held.
"By operation of law these magazines will be confiscated," Gamini told AFP.
"We did not allow this issue to be distributed in Sri Lanka because we felt it could hurt the religious sentiments of the people.
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Buddhist-majority Sri Lanka, where tensions with Muslims and other minority religious communities have been rising, is the second country to censor the edition after Myanmar also blocked it.
The online version of the magazine was still available in Sri Lanka, however.
The local subscription agent, Emit International, said more than 1,000 copies of the issue were held back by customs, but the July 8 issue has been cleared without any problems.
"We were asked to get media ministry clearance, but we never got it," a manager at Emit said.
"It is too late to distribute this (July 1) issue to our subscribe