However, the government claims India’s current tax-to-GDP ratio is much better than many countries with similar per capita income. Such a high ratio is possible only when India achieves per capita income levels of the developed world. Also, the European level of tax-to-GDP ratio punishes the economy through high taxes and India should be careful while setting such benchmarks. However, higher tax rates, multiple levels of taxes, and lower threshold for taxing incomes can also result in higher tax/GDP ratio. For a country with a high young population, India needs businesses to flourish for generating employment, and high consumption for businesses to flourish.

Source: Indian Express February 05, 2024 01:11 UTC