Abstract:
Since becoming independent from Britain in February in 1948, the
economy of the country had been affected by number of insurrections in
1971, 1978- 89 and the 1983 to 2009 civil and natural disasters in 2004
Indian ocean earthquake. In Sri Lanka, tourism, tea export, apparel
textile, rice production and other agricultural products are the main
economic sectors which are contributing to the development of GDP. In
addition to these economic sectors, overseas employment contributes
highly in foreign exchange, most of them from Middle East (Central
Bank Report, 2010). The research question is developed from empirical
evidences and previous literatures. Researchers raise "why the income
tax changes differ from the changes of GDP" in Sri Lanka? as a research
question. The objective of the research is to assess the linearity of the
income tax & GDP in Sri Lanka and to find out the gap between the
income tax and GDP in Sri Lanka. For this study, the primary and
secondary data were used. The secondary data were collected from
Central bank reports, articles and Journals. ICASL guides to income tax
law and economic review and the primary data were collected by
interviewing tax payer, tax authorities from Inland Revenue Department.
Researchers used data during the period from year 1990 to 2010 for this
study. E- views was used to analyze the data. It is proposed to explain
the findings and to make suggestion with the recommendations to the
Government, revenue department and different types of the tax payers to
have cooperative efforts to build up the national assets and to increase
the flow of income tax payment from the public.