It is a very arguable question by every taxpayer as to how his income tax paid is getting utilized by the government. It is well known that the government only receives income tax from 1-2 per cent of the population while it contributes to only 14 per cent of total expenditure done by the central government.
As per the statistics, the total expenditure done by the central government in the 3 financial year terms from 2017 to 2020 is 24,61,136 crores. In this total expenditure, the government receives only 14 per cent from the income tax i.e. 3,47,469 crores.
While corporate tax contributes around 18 per cent of the total expenditure of the central government. So after totalling the percentage of both the contribution, there comes 32 per cent of total central government expenditure.
The total contribution of the GST along with the service tax of the previous regime comes ta 18 per cent of the expenditure. Note that this tax is being contributed by each and every citizen of the country as he avails goods or services in any form.
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Now comes the excise duty which is around 7 per cent of the contribution which is mainly levied on the petroleum products. After which there is customs duty which is totalled at 4 per cent of the total contribution.
Also, there is a non-tax revenue for the central government which is around 10 per cent of the total expenditure. A 4 per cent of contribution comes from other sources such as capital revenues etc.
By totalling all the revenue sources in percentage, it comes around at 70 per cent. Now if we talk about the rest of the 30 per cent expenditure, the government source it from the loans taken from the world bank and it is considered as the fiscal deficit.
The government sells bonds in return of the loans to the banks for repayment of the amount taken. Also, note that the government spends 16 per cent on poor subsidies also which must be taken into the account.
Therefore, it seems that the income tax alone cannot take the liability of the whole economy and it is a joint contribution of every segment which helps the nation to run its chore.