India’s direct tax-to-GDP ratio rising on better data from demonetisation and GST

The Central government’s tax collections have been steadily growing faster than the nominal GDP for the past two-and-a-half years; and from what one learns from the Finance Ministry mandarins, this trend is a product of years of interfacing multiple data sets starting with demonetisation and continuing through GST. These mandarins say this trend of taxes growing faster than GDP may continue for a few more years.

First the numbers:

It’s clear now that, for the third year running, a rise in direct taxes is far higher than the rise in nominal GDP. Within direct taxes, the growth in income tax is showing much higher buoyancy.

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