India’s projected Goods and Services Tax (GST) collections for the current fiscal year have not been met by the tax authorities, thereby compelling the government to jack up the country’s direct tax-GDP ratio.
Speaking on the development on CNBC TV, national tax leader at Ernst & Young (EY), Sudhir Kapadia, pointed out that if the direct tax-GDP ratio increased, then it would be expected that there will be “an uptick in the overall tax to GDP ratio as well.”
Kapadia said further that connectivity between GST and direct tax systems was certainly helping the economy.
India’s direct tax to GDP ratio hit a 10-year high of 6 percent in the fiscal year 2018, with the net direct tax collection in the first seven months standing at Rs 4.9 lakh crore, representing about 42 percent of the budget estimate.
Expatiating further, the national tax leader at Ernst & Young said: “On the tax to GDP ratio, if you look at the combined tax to GDP, direct as well as indirect taxes put together, it is certainly showing an increase from a healthy 0.5 percent to 0.75 percent the last time we had looked at it. It is inching up from overall 11 percent to 12 percent.”
