Tax data for personal income taxes shows people earning
R10-20 lakh pay an effective tax of just 8.6% versus around 20% for those with higher incomes. One reason for this is that Indias highest tax bracket kicks in too quickly, encouraging tax evasionthe highest 30% bracket kicks in at R10 lakh while DTC had recommended raising this to R25 lakh. Getting rid of the plethora of tax exemptions will also help since, right now, the taxman has no way of knowing whether a firm is evading taxes or simply making use of available exemptionsas compared to the corporate tax rate of 32.44%, the effective rate of tax is actually 22.85%. If the next
finance minister doesnt work on this, tax targets will be missed again. By a bigmargin.