Quick Summary
In a significant shift in the Indian tax landscape, personal income tax has now become the largest revenue contributor for the Indian government, surpassing both corporate tax and the Goods and Services Tax (GST). According to recent reports, while GST, corporate tax, and personal income tax each account for nearly 30 per cent of the gross tax collection, their growth trajectories have diverged markedly since FY19. Growth Trends of Major Taxes The corporate tax growth rate has been the slowe
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FAQ :
Personal income tax has emerged as the largest revenue source for the Indian government, surpassing corporate tax and GST.
Each of these taxes accounts for approximately 30 per cent of the gross tax collection, but their growth rates have differed significantly since FY19.
Corporate tax growth has been the slowest and most volatile, largely due to a reduction in corporate tax rates. Even with increased corporate earnings, the growth in corporate tax revenue remained modest.
Factors such as India's robust GDP growth, averaging 11-12 per cent nominally, and a stable indirect tax structure under GST are contributing to the projected increase in tax buoyancy.
Yes, there has been a strategic shift towards capital expenditure, with the ratio of capital spending improving significantly and projected to continue growing faster than revenue spending.
Overall gross tax collection is anticipated to record a compound annual growth rate (CAGR) of 13-15 per cent, with an expected 11 per cent increase in FY25.
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