EVALUATION OF INDIAN TAX STRUCTURE IN PERSPECTIVES OF DTC AND GST AND IDENTIFYING ITS ROLE IN ECONOMY.
The Indian constitution is quasi-federal and the country has a three-tier government – Central government, State Government and Local Governments. As the local public authorities are directly under the state government, no separate allocation of taxation rights has been done to them. Rakesh Mohan at the NCAER conference held in January 2004, had argued that under-taxation in India is the root cause of its financial problem. In the conference, Indira Rajaraman supported the view point in her paper, ‘Fiscal Development and Outlook in India’. According to M. G. Govind Rao, “The available evidence shows that the tax-GDP ratio in India is lower than the level it should be for its per capita GDP growth by at least 2.5 percent per anum. In under-developed country like India where mass of the population is poor, the ratio of revenue collection from direct taxes to that from indirect taxes can not be as high as developed countries of West. Tax revenue is levied by both central as well as state governments. Some of the taxes are levied by each of those two governments. Come under direct tax front and implemented through Direct Tax Code (DTC) and some are Goods and Service Taxes (GST). Indian tax structure is quite extensive. Now almost every conceivable direct an indirect tax is levied in this country. In terms of ratios of tax proceeds to GDP India is one of the modestly taxed countries. Since the resources are inadequate and governments (central as well state) have no choice bit to have to recourse to public debt and deficit financing which is mainly because of colossal unproductive expenditure and indifference to cannon of economy, identifying and evaluating of different elements of DTC and GST need to be done and accordingly to be restructured This process of evaluation and restructuring of tax proposal both in front of DTC and GST also influence the...
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