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Taxation and Investment in India

Author

Listed:
  • Alastair Thomas
  • Isabelle Joumard

    (OECD)

  • Tibor Hanappi

    (OECD)

  • Michelle Harding

    (OECD)

Abstract

Business taxation in India is characterised by high effective tax rates, a narrow tax base, and an uncertain tax environment for potential investors. However, India has now begun a process of significant business tax reform, including a staged reduction of the corporate income tax rate and removal of a range of business tax concessions. This paper sets the scene for these (and further) reforms by examining the taxation of business income in India with a particular focus on its impact on the investment climate. The paper calculates corporate effective tax rates to highlight the impact of the tax system on investment incentives, investigates the narrowness of the current tax base and the proposed base-broadening reforms, and examines the degree of investor certainty as to the tax rules and their application. This Working Paper relates to the 2017 OECD Economic Survey of India (www.oecd.org/eco/surveys/economic-survey-india.htm)

Suggested Citation

  • Alastair Thomas & Isabelle Joumard & Tibor Hanappi & Michelle Harding, 2017. "Taxation and Investment in India," OECD Economics Department Working Papers 1397, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1397-en
    DOI: 10.1787/4258e11a-en
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    Cited by:

    1. Jonas Boone & Johannes Derboven & Sarah Kuypers & Francesco Figari & Gerlinde Verbist, 2019. "EWIGE 2 Update and Extension of the EUROMOD Wealth Taxation Project," JRC Working Papers on Taxation & Structural Reforms 2019-07, Joint Research Centre.
    2. Isabelle Joumard & Alastair Thomas & Hermes Morgavi, 2017. "Making income and property taxes more growth-friendly and redistributive in India," OECD Economics Department Working Papers 1389, OECD Publishing.

    More about this item

    Keywords

    India; investment; taxation;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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