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Trends and Issues in Tax Policy and Reform in India

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  • M.Govinda Rao

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  • R.Kavita Rao

Abstract

The Indian tax reform experience can provide useful lessons for many countries due to the largeness of the country with multilevel fiscal framework, uniqueness of the reform experience and difficulties in calibrating reforms due to institutional constraints. This paper details the evolution of the tax system and its reform over the years and analyses its efficiency and equity implications. In section 2, alternative models of tax system reform are presented with a view to identifying the best practice approach followed in tax system reforms. Section 3 analyses the evolution of Indian tax system and the impact of historical and institutional factors in shaping Indian tax policy. The trends in tax revenue are presented in section 4 and these point towards a relative stagnation and deceleration in tax revenues at both central and state levels. Section 5 analyses the reasons for the stagnation in revenues at central and state levels. This is followed by an exploratory discussion on the possible efficiency and equity implications of tax system. The final section presents directions for further reforms.

Suggested Citation

  • M.Govinda Rao & R.Kavita Rao, 2005. "Trends and Issues in Tax Policy and Reform in India," Working Papers id:243, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:243
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    Cited by:

    1. Singh, Nirvikar, 2007. "The Dynamics of Reform of India’s Federal System," MPRA Paper 2282, University Library of Munich, Germany.
    2. Rao, M. Govinda, 2017. "Public Finance in India in the Context of India’s Development," Working Papers 17/219, National Institute of Public Finance and Policy.
    3. Rao, M. Govinda & Kumar, Sudhanshu, 2017. "Envisioning Tax Policy for Accelerated Development in India," Working Papers 17/190, National Institute of Public Finance and Policy.
    4. Rajesh Chadha, 2009. "Moving to Goods and Services Tax in India : Impact on India’s Growth and International Trade," Trade Working Papers 23071, East Asian Bureau of Economic Research.
    5. Singh, Nirvikar & SRINIVASAN, T N, 2006. "Federalism and Economic Development in India: An Assessment," Santa Cruz Department of Economics, Working Paper Series qt2qs4h3t9, Department of Economics, UC Santa Cruz.
    6. Sacchidananda Mukherjee, 2015. "Present State of Goods and Services Tax (GST) Reform in India," Working Papers id:7532, eSocialSciences.
    7. Singh, Nirvikar, 2007. "Fiscal Federalism and Decentralization in India," MPRA Paper 1447, University Library of Munich, Germany.
    8. Nirvikar Singh, 2007. "The dynamics of reform of India’s federal system," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 8(1), pages 22-31, April.
    9. M. Govinda Rao & Sen, Tapas Kumar & Jena, Pratap R., 2008. "Issues before the thirteenth finance commission," Working Papers 08/55, National Institute of Public Finance and Policy.
    10. Rao, M. Govinda, 2005. "Tax system reform in India: Achievements and challenges ahead," Journal of Asian Economics, Elsevier, vol. 16(6), pages 993-1011, December.
    11. Isher Judge AHLUWALIA, 2008. "Rapid Economic Growth: Contributing Factors and Challenges Ahead," Asian Economic Policy Review, Japan Center for Economic Research, vol. 3(2), pages 180-204.
    12. Zheng Jian & Daniel Jeongdae, "undated". "Prospects for progressive tax reform in Asia and the Pacific," MPDD Working Paper Series WP/17/08, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    13. Sacchidananda Mukherjee, 2017. "Changing Tax Capacity and Tax Effort of Indian States in the Era of High Economic Growth, 2001-2014," Working Papers id:11770, eSocialSciences.
    14. Singh, Nirvikar, 2007. "Fiscal Federalism and Decentralization in India∗," Santa Cruz Department of Economics, Working Paper Series qt11b543tk, Department of Economics, UC Santa Cruz.
    15. Rakesh Mohan, 2008. "The Role of Fiscal and Monetary Policies in Sustaining Growth with Stability in India," Working Papers id:1778, eSocialSciences.
    16. Gupta, Poonam, 2015. "Generating Larger Tax Revenue in South Asia," MPRA Paper 61443, University Library of Munich, Germany.

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