โก Topic 06 of 6 ยท Chapter 08 ยท Quick Revision
Tax-GDP Ratio & Quick Revision
India’s tax-GDP ratio, comparison with other countries, tax buoyancy, and complete chapter revision.
๐ 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 |
โญ 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.
๐ 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 รท % change in GDP
- If buoyancy = 1.5 โ 1% GDP growth โ 1.5% tax revenue growth
- India’s tax buoyancy has improved after GST implementation
โ Complete Chapter 08 Revision Checklist
โ
Direct taxes administered by CBDT; Indirect taxes by CBIC
โ Direct tax = cannot be shifted; Indirect tax = can be shifted
โ GST implemented: July 1, 2017 (101st Constitutional Amendment)
โ GST Article: 246A; GST Council: Article 279A
โ GST rates: 0%, 5%, 12%, 18%, 28%
โ Petroleum products outside GST
โ CGST + SGST = intra-state; IGST = inter-state
โ Corporate tax for existing companies: 22% (reduced from 30% in 2019)
โ Corporate tax for new manufacturing: 15%
โ MAT rate: 15% of book profit
โ Demonetisation: November 8, 2016 (โน500 and โน1,000 notes)
โ Benami Transactions Act: 1988 (amended 2016)
โ GAAR = General Anti-Avoidance Rules
โ India’s Tax-GDP ratio: ~11-12% (low compared to developed countries)
โ Anti-dumping duty = protect domestic industry from below-cost imports
โ PMLA = Prevention of Money Laundering Act, 2002
โ Direct tax = cannot be shifted; Indirect tax = can be shifted
โ GST implemented: July 1, 2017 (101st Constitutional Amendment)
โ GST Article: 246A; GST Council: Article 279A
โ GST rates: 0%, 5%, 12%, 18%, 28%
โ Petroleum products outside GST
โ CGST + SGST = intra-state; IGST = inter-state
โ Corporate tax for existing companies: 22% (reduced from 30% in 2019)
โ Corporate tax for new manufacturing: 15%
โ MAT rate: 15% of book profit
โ Demonetisation: November 8, 2016 (โน500 and โน1,000 notes)
โ Benami Transactions Act: 1988 (amended 2016)
โ GAAR = General Anti-Avoidance Rules
โ India’s Tax-GDP ratio: ~11-12% (low compared to developed countries)
โ Anti-dumping duty = protect domestic industry from below-cost imports
โ PMLA = Prevention of Money Laundering Act, 2002