Evaluation of Indian Tax Structure in Perspectives of Dtc and Gst and Identifying Its Role in Economy.

EVALUATION OF INDIAN TAX STRUCTURE IN PERSPECTIVES OF DTC AND GST AND IDENTIFYING ITS ROLE IN ECONOMY.

Abstract:

The Indian constitution is quasi-federal and the country has a three-tier government – Central government, State Government and Local Governments. As the local public authorities are directly under the state government, no separate allocation of taxation rights has been done to them.
Rakesh Mohan at the NCAER conference held in January 2004, had argued that under-taxation in India is the root cause of its financial problem. In the conference, Indira Rajaraman supported the view point in her paper, ‘Fiscal Development and Outlook in India’. According to M. G. Govind Rao, “The available evidence shows that the tax-GDP ratio in India is lower than the level it should be for its per capita GDP growth by at least 2.5 percent per anum.
In under-developed country like India where mass of the population is poor, the ratio of revenue collection from direct taxes to that from indirect taxes can not be as high as developed countries of West.
Tax revenue is levied by both central as well as state governments. Some of the taxes are levied by each of those two governments. Come under direct tax front and implemented through Direct Tax Code (DTC) and some are Goods and Service Taxes (GST).
Indian tax structure is quite extensive. Now almost every conceivable direct an indirect tax is levied in this country. In terms of ratios of tax proceeds to GDP India is one of the modestly taxed countries. Since the resources are inadequate and governments (central as well state) have no choice bit to have to recourse to public debt and deficit financing which is mainly because of colossal unproductive expenditure and indifference to cannon of economy, identifying and evaluating of different elements of DTC and GST need to be done and accordingly to be restructured
This process of evaluation and restructuring of tax proposal both in front of DTC and GST also influence the economy of the country.
In this work an analysis has been made to study Indian tax structure and analyze the different areas under DTYC and GST and also study how it burdens as well as relieves Indian people and Indian economy.

Key words: Taxation, direct tax, GDP, revenue, public debt, deficit financing.

EVALUATION OF INDIAN TAX STRUCTURE IN PERSPECTIVES OF DTC AND GST AND IDENTIFYING ITS ROLE IN ECONOMY.

INTRODUCTION: India’s tax structure is quite extensive. Now almost every conceivable direct and indirect tax is levied in this country. In terms of the ratios of tax proceeds to GDP, India is one of the mostly taxed countries. And, if today the government feels that its resources are inadequate and it has no choice but to have resources to public debt and deficit financing, it is mainly due to its unplanned expenditure and to some extent indifference to its economy.
In India still there are existence of tax ambiguities and tax burden both in respect of DST and GST. In DST there need to analyze several areas and need rationalization with respect tax levied upon considering the demographics of economy, societal condition and developmental trend of people. As some area need tax exemption under DTC, in some areas tax need to be levied since the socio economic condition among Indian people are changing. Agricultural income are very rarely subjected to income tax being levied since in post independence era farmers, mostly throughout India, were existing as unprivileged wage earners 8in respect of lack of technology, information, knowledge, infrastructural resources, irrigation facilities, favorable environmental condition etc. But situation is changing with advancement of technology etc. and pattern of agricultural income are, in many cases, are being significantly under state of changes. This need reconsideration in respect of tax being levied upon agricultural income as an element DTC.
In GST also several discrepancies are still existing and need reviewing the situation. This work is an effort in this direction to identify progress, discrepancies and effect overn economy over of the different aspects and dimensions of Direct Tax Code (DTC) and General Service Code (GST).

2.EVALUATION OF INDIAN TAX STRUCTURE

As far as the Indian tax structure is concerned, the following features are notable for DTC and GST.

2.1 Built-in Flexibility and Buoyancy:

If elasticity of various taxes levied in a country is high, the taxation system is said to have built in flexibility. The concept of buoyancy of taxes is relatively wider. When changes in tax rates and expansion in tax bases are also taken into consideration for estimating the response of tax proceeds to rise in national income, we assess buoyancy of tax structure.
The National Institute of Public Finance and Policy (NIPFP) has estimated both elasticity and buoyancy of India’s tax structure for 1970 – 71 to 1983 – 84. The study revealed that while the elasticity of total tax revenue was less than unity 90.96), its buoyancy was greater than unity (1.21). Tax revenue of states was both more elastic and buoyant than the tax revenue of the center.

2.1.1 Built-in Flexibility and Buoyancy in DTC and GST:

In India presently among direct taxes, land revenue is the most inelastic and least buoyant tax. Its elasticity and