Widening Tax Base Flashcards
Q. Describe the current scenario of Taxation in India .
Ans : * Tax to GDP ratio : 11.1% in FY 23.
- Direct taxes : 6%
- Indirect taxes : 5.1%
- Lower than the emerging market economy avg of 21% and the OECD average of 34%
* Filing of ITR : 5.3% of the total population .
* Year on year growth in net direct tax collections : 17.67% at 16.61 lakh crore in FY 23, as per CBDT.
Q. What are some reasons for the low tax base in India ?
Ans : 1. Presence of large informal sector : translations often routed through cash, making tracking difficult.
2. Tax exemption for agriculture: primary source of income for nearly 60% of Indians
3. High incidence of tax litigation .
4. Lack of technical expertise and resources (financial and manpower).
Q. What are some steps taken by the government to widen the tax base ?
Ans : 1. Transparency : Cross seeding of PAN with Bank Accounts and Aadhar.
2. Objectivity : Introduction of New data sources and TDS codes.
3. Taxpayer friendliness : Simplified personal income tax regime, e-appeals scheme, roll out of common IT return form .
Q. What further measures could be taken to broaden the tax base ?
Ans : 1. Establishing a separate authority to settle tax disputes .
2. Inclusion of high-income agricultural households.
3. Inclusion of more technology.
Q. Write a conclusion for the topic “widening tax base” .
Ans : Widening India’s tax base will boost revenue, fairness, and economic stability in the country . It would further ease reliance on few taxpayers, and enhance governance promoting equitable growth and fiscal responsibility.
