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Impact of Tax Breaks on Household Financial Saving in India

Author

Listed:
  • Pandey, Radhika
  • Patnaik, Ila
  • Sane, Renuka

Abstract

Academic literature on the effectiveness of tax breaks on financial saving in India is scant. This paper, for the first time, presents macro as well as micro evidence on what has been achieved by tax breaks with regards to financial saving. It uses aggregate national accounts data to study how financial savings have evolved with changes in tax breaks. It studies household portfolios for the financial year 2016–17 using the Consumer Pyramids household survey. It finds that there is no link between tax breaks and overall financial savings. Households that fall in a non-zero tax bracket invest more heavily in the tax-incentivized products. These results have implications for the design of tax policy.

Suggested Citation

  • Pandey, Radhika & Patnaik, Ila & Sane, Renuka, 2019. "Impact of Tax Breaks on Household Financial Saving in India," India Policy Forum, National Council of Applied Economic Research, vol. 15(1), pages 1-38.
    • Handle: RePEc:nca:ncaerj:v:15:y:2019:i:2019-1:p:1-38
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    File URL: https://www.ncaer.org/publication/india-policy-forum-2018
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The usefulness of the CMIE household survey data for electricity research in India
      by Anurodh in Ajay Shah's blog on 2024-05-08 08:35:00

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    Cited by:

    1. Upreti, Priyanka & Handa, Akanksha & Chaudhari, Dipak & Ghosh, Saurabh, 2021. "A Composite Indicator of Realty Sector Activity in India," MPRA Paper 111059, University Library of Munich, Germany.

    More about this item

    Keywords

    Tax Policy; Tax Incentives; Saving; India;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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