Dangers of a wrong diagnosis

A change in the composition of the Centre’s gross tax revenue (GTR) in 2020-21 has caused consternation among tax experts. Last financial year, the share of direct tax revenues in total GTR was 4.7 per cent of gross domestic product (GDP), much lower than indirect tax revenues at 5.4 per cent of GDP. This was only the second time in the last 13 years that direct tax revenues were lower than those from indirect taxes. The earlier occasion was 2016-17, the year of demonetisation, when direct tax revenues at 5.52 per cent of GDP were just a notch below 5.63 per cent of GDP for indirect taxe.....

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