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Evaluation Of Indian Tax System

  1. Cannon of equity is not uniform as indirect taxes form a big % of total receipts which generally falls heavily on the poorer section.
  2. Cannon of diversification is not conforming as it depends mostly on urban income and leaves almost completely agricultural income.
  3. Cannon of coordinate is not evident as state government is not properly coordinating with centre government on various like implementation of VAT.
  4. Evasion and avoidance is easy.
  5. Cannon of economy is also not conform at the cost of collection of tax is rising.
  6. Indian tax structure is accused of discouraging employment by: (i) distorting prices, and (ii) adversely affecting savings.

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