⚡ Topic 06 of 6 · Chapter 08 · Quick Revision
Tax-GDP Ratio & Quick Revision
India’s tax-GDP ratio, comparison with other countries, tax buoyancy, and complete chapter revision.
📊 Tax-GDP Ratio
The Tax-GDP ratio measures the total tax revenue as a percentage of GDP. It indicates the government’s ability to collect taxes.
| Country | Tax-GDP Ratio | Note |
|---|---|---|
| India | ~11-12% | Low compared to developed countries |
| USA | ~27% | Moderate |
| UK | ~33% | High |
| Sweden | ~42% | Very high (welfare state) |
| OECD Average | ~34% | Benchmark for developed countries |
⭐ Why India’s Tax-GDP Ratio is Low: Large informal economy (~90% of workforce), widespread tax evasion, narrow tax base (only ~7 crore income tax filers out of 140 crore population), agricultural income exempt from income tax.
📊 Tax Buoyancy
Tax buoyancy measures the responsiveness of tax revenue to changes in GDP. If tax buoyancy > 1, tax revenue grows faster than GDP.
- Tax Buoyancy = % change in tax revenue ÷ % change in GDP
- If buoyancy = 1.5 → 1% GDP growth → 1.5% tax revenue growth
- India’s tax buoyancy has improved after GST implementation
✅ Complete Chapter 08 Revision Checklist
✅ Direct taxes administered by CBDT; Indirect taxes by CBIC
✅ Direct tax = cannot be shifted; Indirect tax = can be shifted
✅ GST implemented: July 1, 2017 (101st Constitutional Amendment)
✅ GST Article: 246A; GST Council: Article 279A
✅ GST rates: 0%, 5%, 12%, 18%, 28%
✅ Petroleum products outside GST
✅ CGST + SGST = intra-state; IGST = inter-state
✅ Corporate tax for existing companies: 22% (reduced from 30% in 2019)
✅ Corporate tax for new manufacturing: 15%
✅ MAT rate: 15% of book profit
✅ Demonetisation: November 8, 2016 (₹500 and ₹1,000 notes)
✅ Benami Transactions Act: 1988 (amended 2016)
✅ GAAR = General Anti-Avoidance Rules
✅ India’s Tax-GDP ratio: ~11-12% (low compared to developed countries)
✅ Anti-dumping duty = protect domestic industry from below-cost imports
✅ PMLA = Prevention of Money Laundering Act, 2002
✅ Direct tax = cannot be shifted; Indirect tax = can be shifted
✅ GST implemented: July 1, 2017 (101st Constitutional Amendment)
✅ GST Article: 246A; GST Council: Article 279A
✅ GST rates: 0%, 5%, 12%, 18%, 28%
✅ Petroleum products outside GST
✅ CGST + SGST = intra-state; IGST = inter-state
✅ Corporate tax for existing companies: 22% (reduced from 30% in 2019)
✅ Corporate tax for new manufacturing: 15%
✅ MAT rate: 15% of book profit
✅ Demonetisation: November 8, 2016 (₹500 and ₹1,000 notes)
✅ Benami Transactions Act: 1988 (amended 2016)
✅ GAAR = General Anti-Avoidance Rules
✅ India’s Tax-GDP ratio: ~11-12% (low compared to developed countries)
✅ Anti-dumping duty = protect domestic industry from below-cost imports
✅ PMLA = Prevention of Money Laundering Act, 2002