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Features of tax structure in India

  • Tax revenues forms about 16% (2011-12) of our total national income. However, it amounted to only 6.7% in 1950-51 and 11% in 1960-61. (See Chart 2). Among the third world countries, India is one of the highest taxed countries.
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  • Tax revenue collected by both, the Central and State Governments has increased from 460 crores in 1951-52 to about 14,60,000 crores in 2011-12 (See chart 3)
Chart 3: Tax revenue collected (in crores)
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  • The share of direct taxes in the gross tax revenue was 41% in 2011-12 while that of indirect taxes was 59% (See chart 4). This dependence on indirect taxes, however, is unfavourable owing to their role in fuelling inflationary trends
Chart 4: Tax share in 2009-10
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  • The Indian tax structure is based on a very thin population base as only a small portion of the population is liable to pay income tax (only 3%)
  • In 2011-12, corporation tax (36%) largest sources of tax revenue followed by Union Excise duty (19%), Personal income tax (18.6%) and customs duties (17%)
  • Agricultural income is tax exempted
  • Tax revenue being highly insufficient to meet Government expenditure, there has been excessive dependence on internal and external debts

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