4 min read.Updated: 08 Dec 2020, 10:27 PM ISTSatya Mohanty
Tax simplification and regulatory easing will help but India must fight electoral corruption first
The ‘shadow economy’ is understood differently by different people. For tax authorities, it is anything that has escaped the tax net, while for economists it is that part of economic activity which is not captured in the gross national product (GNP). While India’s informal sector has been estimated at 65% of GNP, its black economy was put at 22% by Schneider’s research in 2007. A substantial part of the informal economy is captured in the formal national accounts and by the tax net. It may not come under direct taxes, as income here may mostly be under the taxation threshold.