Experts say that despite the massive increase in income tax rate in recent years, the country’s low- and middle-income households are still receiving little in the way of revenue.
In an interview with The Times Of India, the author and former finance secretary M.K. Sreekumar, who retired from the Finance Ministry in 2015, said, “Income tax has not been the biggest source of revenue for the state.
The state’s tax revenue from the indirect taxes is around Rs 1,800 crore a year.
“As per the new estimates, the indirect tax rate for the lowest income households will fall from 13% to 10% in the next decade. “
“For the middle income households, it will go from 10% to 7%. “
This will be even worse for the poor.””
For the middle income households, it will go from 10% to 7%.
This will be even worse for the poor.”
According to a report by the government-backed Centre for Policy Research (CPR), the direct taxes will be raised by Rs 10,000 crore in the coming decade, while the indirect ones will rise from Rs 8,000 to Rs 9,000.
In the first three years, indirect taxes will account for Rs 3,400 crore, while direct taxes are expected to increase by Rs 3.5 lakh crore.CPR estimates that indirect taxes and direct taxes combined will amount to around 30% of the overall indirect tax collection in India.
The indirect taxes are being levied on various services, such as land, fuel, education and healthcare.
The tax on goods will be higher, due to the tax on inputs like cotton, fertiliser and other inputs.
In a recent report by IIT-Bombay, a professor of tax policy at the University of Cambridge, the tax burden on the middle- and upper-income groups is higher than the income tax burden, due mainly to lower rates and lower taxes paid by these groups.
“In the last decade, indirect tax rates have fallen to 5% and the indirect taxation burden on income is higher,” he said.