According to a national tax leader at a reputed financial service providing company, there is an increase in direct tax as Goods and Services Tax (GST) has not given returns as the way it was expected.
The tax expert stated that “if that picks up then we should see an uptick in the overall tax to GDP ratio as well,”, and he also added that the connection between GST and direct tax systems is surely helping.
In the financial year 2018, India’s direct Tax to GDP has been 6 percent high relevant to the past ten years. For the first seven months, the net direct tax collection is Rs 4.9 lakh crore which is approx. 42 percent of the budget estimate for this financial year.
“On the tax to GDP ratio, if you look at the combined tax to GDP, direct as well as indirect taxes put together, it is certainly showing an increase from a healthy 0.5 percent to 0.75 percent the last time we had looked at it. It is inching up from overall 11 percent to 12 percent,” the expert added.
For the uninitiated, goods and services tax has been delivering approximately 1 lakh crore of indirect taxes to the revenue department of the government and there are sometimes fluctuations in the collections.
