Column: Focus on GST and DTC first
Poor tax-to-GDP ratio has also meant a concomitant rise in the country’s fiscal deficit—from 2.7% of GDP in 2007-08 to an estimated 5.8% of GDP in 2012-13. According to World Bank’s Global Development Finance 2012 report, India had the fifth-largest absolute debt stock among top 20 developing debtor countries. In the context of the precarious fiscal health of the economy, Rangarajan has suggested that revenue augmentation should be given equal emphasis as expenditure minimisation initiatives, such as reducing government expenditure on subsidies. Hence the proposal.
India’s income tax regime has remained stable in the past one and a half decade, guided by the philosophy of ‘few rates, low rates’ post-1997 ‘Dream Budget’ of P Chidambaram. There have been no changes in the personal income tax slabs of 10%, 20% and 30% in the past 15 years, though an education cess at 2%, and secondary and higher education cess of 1% of income tax applicable for all persons has been levied since 2004 and 2007, respectively. The yet-to-be-implemented Direct Taxes Code (DTC) has proposed
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