The recent taxation reforms have been a topic of discussion among economists and policymakers. With a aim to increase revenue and stimulate economic growth, the government has introduced several measures. The Goods and Services Tax (GST) has been a major reform, simplifying the indirect tax structure and increasing compliance. However, the direct tax regime still requires attention, with a complex system of exemptions and deductions.
According to a report, the tax-to-GDP ratio in India is around 17%, which is lower compared to other emerging economies. To increase this ratio, the government needs to focus on widening the tax base and reducing exemptions. With a estimated loss of 2.5% of GDP due to tax evasion, the government must take strict measures to curb this menace.
The taxation reforms have seen a positive response from the industry, with 60% of businesses expecting an increase in revenue. However, 25% of taxpayers have expressed concerns about the complexity of the tax system. The government must ensure that the benefits of taxation reforms reach all sections of society, with a focus on the marginalized and underprivileged. With a total collection of $250 billion in taxes in the last fiscal year, the government has a huge task ahead to achieve its revenue targets.