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Tax-GDP Ratio
Why is it in the news ?
- Given the sharp rise in the number of Income-Tax returns filed and an increase in the number of taxpayers, the direct tax-GDP ratio touch a decadal high of almost 6 per cent.
More in the news
- The average tax paid by corporates has jumped 55 per cent to Rs 49.95 lakh in 2016-17 compared with Rs 32.28 lakh in 2013-14.
- In the case of individuals, the average tax paid has increased by 26 per cent to Rs 58,576 in 2016-17 from Rs 46,377 in 2013-14.
- Legislative and administrative measures, combined with enforcement efforts by the Tax Department helped to check tax evasion.
- The Tax Department data also show better compliance among salaried taxpayers vis-à-vis non-salaried taxpayers.
- Currently India’s tax-to-GDP ratio is 11.9% .
- The good news is that it has been inching up in the past years and despite a growth slowdown, it was at 11.6% in fiscal 2018.
- For fiscal 2019, the target is of 12.1% .
Tax-GDP ratio
- Tax GDP ratio shows the tax revenue for a country measured in terms of GDP.
- For example, if India’s tax GDP ratio is 15%, it means that the government gets 15% of its GDP as tax contribution from the public and entities.
- The tax-GDP ratio shows the richness of the government’s exchequer.
- The government’s ability to spend on socio-economic development programs, military, salary, pension heads etc., depends on tax GDP ratio.
Source
Indian Express, IiveMint