TAX
TO GDP RATIO - ECONOMY
News: Direct tax-GDP ratio rose to 15-year
high in FY23
What's
in the news?
●
Direct
tax-to-GDP ratio, which reflects the share of taxes in the
overall output generated in the country, rose to a 15-year high of 6.11 percent in the financial year 2022-23,
time-series data released by the Central Board of Direct Taxes (CBDT) under the
Ministry of Finance.
Tax
to GDP Ratio:
●
It measures how much tax is collected in relation to the country’s GDP.
●
It gives policymakers and analysts a
parameter that can be used to compare tax receipts from year to year.
Significance:
●
The better the country’s financial
situation, the higher the tax to GDP ratio.
●
The ratio indicates how well the
government can afford its expenses.
Tax
to GDP Ratio for India:
●
Only
~ 6% of people in India pay income tax, i.e. 8 crore people out of 132 crore
population.
●
As
of 2023 Gross tax to GDP in India is 11.1%.
●
Direct tax-to-GDP ratio, which reflects
the share of taxes in the overall output generated in the country, rose to a
15-year high.
Go
back to basics:
Tax
Revenue:
●
The total amount of taxes collected by the
government.
GDP:
●
It is the total value of all goods and
services produced within a country's borders.