February 21, 2017

Decoding India’s Low Tax Base Conundrum

Praveen Chakravarty, Visiting Senior Fellow at IDFC Institute, writes on India's low tax base and its plausible explanations. To quote:


"So, when the Economic Survey suggests that India has among the fewest taxpayers per 100 voters, it is equally important to consider this fact that India has one of the highest exemption thresholds for paying income tax.


...It is thus premature to conclude automatically that India’s inordinately low tax base is entirely a function of massive tax evasion by Indians. While lowering the income tax rates, had the Finance Minister also lowered the income tax exemption threshold to say Rs 1.5 lakh, 1.1 crore more Indians would have automatically qualified to pay income tax. This would have brought India more in-line with the rest of the world in terms of exemption threshold to per capita GDP ratio."


Read the whole article on BloombergQuint here.

Topic : State Capacity / In : OP-EDS
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