Tax collection in India one of highest, reduce direct tax to 25%: Bhalla

While India is not the richest country in the world, the tax collection is one of the highest and the income tax rate should be reduced from around 40 per cent at present, economist Surjit Bhalla said

Surjit Bhalla

New Delhi

Listen to This Article

While India is not the richest country in the world, the tax collection here is one of the highest and the income tax rate should be reduced to 25 per cent from around 40 per cent at present, eminent economist Surjit Bhalla said.
While speaking to PTI, Bhalla said reduction in tax rate is required to accelerate the pace of economic growth.
"We are a much more globalised economy in the world and the world is a lot more globalised. If you look at the overall tax rate structure in India, collection of taxes is one of the highest in the world and we are not the richest economy of the world," Bhalla said.
He said that tax collection by state, Centre and local bodies is around 19 per cent of India's GDP.
"We should move towards reducing it by 2 percentage points. As far as direct taxes are concerned, I think the overall tax rate should not be more than 25 per cent. Right now it is close to 40 with surcharges etc. 25 per cent, which is our corporate tax rate, that's what our income tax rate should be," Bhalla said.
Currently, the highest income tax rate in India stands at 39 per cent. The Budget 2023-24 had lowered India's highest rate of income tax from 42.74 per cent, by reducing the surcharge applicable on high net-worth individuals.

Also Read

Net direct tax collection hits Rs 13.73 trn, 83% of FY23 revised estimate

Direct tax mop up skyrockets 173% to over Rs 19.68 trillion in 10 years

ED chargesheets former Punjab SSP Surjit Singh Grewal in PMLA case

Gross direct tax mop-up grows 24% to Rs 15.67 trn, net collection rise 18%

Direct tax buoyancy again falls sub-2% in 2022-23

Entire E2W supply chain under stress as govt stance on subsidy hardens

From green hydrogen to circular economy, Centre goes for sustainable growth

Germany recession may impact Indian exports: CII EXIM committee chairman

Angel tax: Experts seek 10% safe harbour for convertible preference shares

Negotiations on supply chain agreement under IPEF conclude: Ministry

Bhalla said that taxes need to come down for all and not just benefit a select section of the society.
India's gross direct tax collection during the last fiscal ended March 2023 grew over 20 per cent to Rs 19.68 lakh crore.
This includes gross corporate tax collection growth of 16.91 per cent at over Rs 10.04 lakh crore. Gross personal I-T collection jumped 24.23 per cent to over Rs 9.60 lakh crore.
Bhalla said direct tax is one of the areas where there is a lot of bureaucratic involvement and it should be a lot more streamlined to minimise tax evasion.
"You cannot minimise tax evasion without doing something about very very high rates of income taxation. We need to change the tax structure so that everyone benefits rather than some selected sectors," he said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: May 28 2023 | 6:20 PM IST

Explore News