Fast-paced growth of tax collections has been the key driver of the government’s revenue receipts, comprising tax collections and receipts, such as dividend from the Centre’s equity shareholding. The share of tax collections in revenue receipts, which was about 50% five years ago, is now estimated at 73% of the Rs6.45 trillion revenue receipts in 2006-07.
Changing GDP structure sets the stage … (Graphic)
Tax proposals over time reflect policy shifts and social changes (Graphic)
Within this story is the sub-text of a structural shift that is under way. For the first time, direct tax collections are poised to surpass indirect tax receipts. The development has far-reaching implications, including on social equity. Direct taxes target people who, in the government’s view, can afford to pay. Indirect taxes do not discriminate between people.
Finance minister P. Chidambaram says the growth rate in direct taxes has been driven by moderation in rates and better compliance by taxpayers, and a computerization drive by the tax department has also improved voluntary compliance.
Compiled by Sanjiv Shankaran
Illustrations by Malay Karmakar / Mint
Graphics by Ahmed Raza Khan / Mint