The document analyzes tax collection trends in India. It finds that India's tax-to-GDP ratio has historically been lower than most advanced economies but has been rising in recent years. Total tax collections reached Rs. 26.5 trillion (USD 385 billion) in 2016-17, with the central government collecting around two-thirds. Direct tax collections have increased as a share of total taxes, growing from 16% in 1991 to 37% in 2017. The government aims to further increase tax collections through reducing evasion and improving compliance. Recent initiatives like demonetization and the GST have added many new taxpayers and increased tax revenues based on preliminary government assessments.

1. www.indiabusinessreports.com
Tax Collections in India – A primer
Sector: Macroeconomics
Oct-2017

2. Context
• Increase in tax collections primarily by reducing evasion is one key
focus area of the current NDA government, and its PM Mr Narendra
Modi and FM Arun Jaitley. If this get this right, it will indeed be
transformative for the Indian economy.
• Considerable public discussion has occurred on whether the twin
initiatives – demonetisation and GST implementation – are mere
disruptors or are having any real beneficial impact
• IBR was also intrigued by these questions. We realise it is still early
days for any results to show up. However, we went about first
compiling some historical data for our own understanding. We
intend to follow this theme over next few quarters to see where this
is going
• This data dump is uploaded for public benefit. We hope to make
this more robust going forward
www.indiabusinessreports.com 2Tax Collections in India

3. India’s Tax/GDP ratio is less than most advanced economies
3
Source: India Business Reports, Wikipedia, RBI, World Bank
www.indiabusinessreports.com Tax Collections in India
39.3
28.1
35.9
44.5
34.4
47.9
19.4
43.5
34.4
39.8
33.6
19.5
37.3
34.3
23.7
12.0
24.9
39.8
35.0
5.3
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Tax/GDP Ratio (%) - Top 20 economies
• The government wants to raise it by enforcing better tax compliance; reducing rampant evasion of both direct and indirect
taxes

4. Tax/GDP has shown a rising trend, up sharply from the low of 2009-10
4
Source: India Business Reports, RBI
www.indiabusinessreports.com
15.6%
16.0%
15.6%
14.4%
14.6% 14.7% 14.6%
14.2%
13.3%
15.3%
15.8%
14.9%
15.7%
16.2%
17.1%
16.1%
17.5%
17.7%
16.6%
15.2%
16.0%
17.7%
18.2%
17.8%
17.6%
18.9%
19.4%
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
18.0%
19.0%
20.0%
Tax/GDP ratio (%)
Tax Collections in India
• You will often see a lower ratio of 10-11% quoted in media. That is not quite correct. Since it perhaps takes only central
government taxes in the numerator. To be fair, even World Bank data on Tax/GDP for India has the same issue

5. ~Rs 26.5 trillion (USD 385B) of taxes were collected in 2016-17
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876 1,146 1,463 1,973 2,300 3,010 3,520
4,854
7,240
9,263
12,501
16,880
20,207
23,553
26,495
-
5,000
10,000
15,000
20,000
25,000
30,000
Total Tax Collection (Rs B)
Source: India Business Reports, RBI
Tax Collections in India
• This is Centre + States

6. Central government collects around 2/3rd of taxes
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Tax Collection Mix - Centre versus State
Centre State
Source: India Business Reports, RBI
Tax Collections in India

7. Share of direct tax has risen from 16% in ‘91 to 37% in ‘17
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Direct versus Indirect Tax
Direct Indirect
Source: India Business Reports, RBI
Tax Collections in India

8. Direct Tax Assessees
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• Around 5.2 crore or 52 million assesses file returns, of which individuals and are around 49million according to
latest available data. (Several tax filers would not be paying any tax however).
• According to a recent government statement, 6.35m individual tax payers were added in FY16, and another 8.07m
were added in FY17. Also, a total of 9.1m taxpayers were added in FY17.
• Caveat: Government’s tax assesee data appears to be a little dodgy. Different sources keep showing varations
Source: Income Tax Department
AY 2013-14
Association of Person 1,38,098
Body of Individuals 6,052
Company 7,02,621
Firm 10,38,309
Governmen 159
Hindu Undivided Family 9,56,233
Artificial Juridical Person 10,039
Local Authority 5,935
Individual 490,33,288
Trust 2,02,590
TOTAL 520,93,324
Tax Collections in India

9. Indirect tax collections
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• Please note, this is only date for collection by Central government, which is around 2/3rds of total indirect tax
collection. As we noted earlier, states collect indirect taxes as well
Year
Revenue %age Share in Total
Realization from Indirect Taxes
Customs Excise Service FTT/
Total
Customs Excise Service
Duties Duties Tax IATT Duties Duties Tax
2000-01 47,542 68,526 2,613 1,133 1,19,814 40 57 2
2001-02 40,268 72,555 3,302 1,193 1,17,318 34 62 3
2002-03 44,852 82,310 4,122 1,324 1,32,608 34 62 3
2003-04 48,629 90,774 7,891 1,314 1,48,608 33 61 5
2004-05 57,611 99,125 14,200 - 1,70,936 34 58 8
2005-06 65,067 1,11,226 23,055 - 1,99,348 33 56 12
2006-07 86,304 1,17,088 37,484 - 2,40,876 36 49 16
2007-08 1,04,119 1,23,611 51,301 - 2,79,031 37 44 18
2008-09 99,879 1,08,613 60,941 - 2,69,433 37 40 23
2009-10 83,324 1,03,621 58,422 - 2,45,367 34 42 24
2010-11 1,35,813 1,38,299 71,016 - 3,45,128 39 40 21
2011-12 1,49,300 1,45,617 97,356 - 3,92,273 38 37 25
2012-13 1,65,818 1,75,873 1,32,518 - 4,74,209 35 37 28
2013-14 1,69,469 1,70,197 1,54,778 - 4,96,238 34 34 31
2014-15 1,88,016 1,89,953 1,67,969 - 5,45,938 34 35 31
2015-16 2,10,000 2,86,000 2,11,396 - 7,07,377 30 40 30
2016-17#(P) 2,26,000 3,83,000 2,54,000 - 8,63,000 26 44 29
Abbr. : IATT : Inland Air Travel Tax; FTT :
Foreign Travel Tax. : FTT/IATT abolished since
09.01.2004.
Note : # : from CBEC press release
Source : Ministry of Statistics and Programme
Implementation, Govt. of India & Past Issues.
(ON1196), Lok Sabha Unstarred Question No.
437, dated on 03.02.2017
(Rs. in Crore)
Tax Collections in India

10. Customs and excise revenue from petroleum products
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Petroleum Product Petrol Diesel Sub total Annual Total
2012-13
Customs 492 211 703 46,926
Central Excise 23,710 22,513 46,223
2013-14
Customs 626 26 652 50,222
Central Excise 22,424 27,146 49,570
2014-15
Customs 901 75 976 74,266
Central Excise 30,826 42,464 73,290
2015-2016 Central Excise 53,413 1,01,177 1,54,590 1,54,590
2016-2017* Central Excise 64,509 1,37,426 2,01,935 2,01,935
Rs crore
• Government has reaped large increase in revenues imposing additional duties and by keeping consumer prices
high at a time of low international crude prices
Source : Lok Sabha Unstarred Question No. 1930, dated on 31.07.2015 & Lok Sabha Unstarred Question No. 4955, dated on 31.03.2017.
Tax Collections in India

11. Collection from various cesses
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2014-15 2015-16 2016-17 2017-18(B)
Education Cess 35,977 27,785 29,599 31,654
Krishi Kalyan Cess 9,000 10,800
Swachh Bharat Cess - 3,926 12,500 13,300
Security Transaction Tax 7,398 7,350 7,398 7,768
Clean Environment Cess 5,393 12,676 28,500 29,700
• In recent years, the government is introduced various addon taxes – to income tax / customs / excise and service
tax. These are meant to be spent in specific areas like education / farming etc
• Collections from some of these have become quite substantial
Rs crore
Source : Budget documents
Tax Collections in India

12. Government statements on impact of demo and GST on direct taxes
• 07-August: 2017- 25% growth in number of Income Tax Returns filed in current fiscal Advance Tax
(Personal Income Tax) collections up by 41%
– As a result of demonetization and Operation Clean Money, there is a substantial increase in the number of Income Tax Returns(ITRs) filed. The
number of Returns filed as on 05.08.2017 stands at 2,82,92,955 as against 2,26,97,843 filed during the corresponding period of F.Y. 2016-2017,
registering an increase of 24.7% compared to growth rate of 9.9% in the previous year. The growth in returns filed by Individuals is 25.3% with
2,79,39,083 returns having been received upto 05.08.2017 as against 2,22,92,864 returns in the corresponding period of F.Y. 2016-2017.
• 31-August-2017: OPERATION CLEAN MONEY
– The Income Tax Department launched ‘Operation Clean Money’(OCM) on 31st January, 2017 to analyse the data of the persons who deposited large
sums of cash and whose returns of income were not in sync with such deposits.
Phase 1
• In the first phase of OCM, 18 lakh suspect cases were identified through use of data analytics where cash transactions did not appear to be in line with the tax profile of
depositors.
• The scale of the Operation may be gauged from the fact that response of 9.72 lakh persons in respect of 13.33 lakh accounts involving cash deposits of around Rs.2.89
lakh crore, as per pre-defined parameters on sources of the cash deposits was captured by the Income Tax Department within a short span of 3-4 weeks.
Phase 2
• The Operation Clean money has since moved into the next phase that includes enforcement actions in high risk cases, taxpayer engagement through a dedicated website
in medium risk cases and close monitoring in low risk cases.
• The exercise has also unearthed large number of persons and clusters having suspect transactions. These include about
14,000 properties of more than Rs.1 crore each where persons have not even filed Income Tax Returns. The investigations
are in progress.
www.indiabusinessreports.com 12Tax Collections in India

13. Government statements GST
• 29-August-2017: The number of new taxpayers who have registered with the GSTN upto 29th
August, 2017 (10 a.m.) is 18.83 lakhs (1.88m)
– Total GST registered based was 72.33 lakh taxpayers as on the same data. In other words, there was an increase of 35% in the registered
base
www.indiabusinessreports.com 13Tax Collections in India

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