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'India's tax-GDP ratio one of the lowest'

Source : BUSINESS_STANDARD
Last Updated: Mon, Mar 25, 2013 19:54 hrs
An employee sorts Indian currency notes at a cash counter inside a bank in Agartala

At 15.5 per cent, India has one of the lowest tax-to-gross domestic product (GDP) ratios, says a recent paper by the Centre for Budget and Governance Accountability. Even lower middle-income countries had tax-GDP ratios of 17.7 per cent, the paper said.

Among G20 countries, India had the third-lowest tax base, before Mexico and Indonesia, the paper said. The 37.7 per cent share of direct taxes to India's total taxes was lower and regressive compared to developing countries such as South Africa (57.5 per cent), Indonesia (55.85 per cent) and Russia (41.3 per cent). Developed G20 countries had a greater share of taxes as part of total tax revenues, the paper said, adding in the US, this stood at 75.8 per cent.



The property tax-to-GDP ratio in India is only 0.48 per cent; for France and the UK, it is 4.3 per cent and 4.21 per cent, respectively. For China, it is 1.7 per cent. Wealth tax in India is only 0.007 per cent of GDP, while it is 0.89 per cent in France.

In 2011-12, the tax-GDP ratio stood at 5.5 per cent for direct taxes and 4.4 per cent for indirect taxes. The finance minister P. Chidambaram had said that we can reclaim the peak rate of 11.9% in the FY 2007-08, adding that this is not enough to be on the path of inclusive growth and sustainable development.

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