Tax-GDP ratio to go up: Niti Aayog

NEW DELHI: Niti Aayog has said demonetisation and other financial reforms by the government will have a significant implication on increasing the tax kitty. “Several reforms including demonetization would have a durable impact on the direct tax revenues," the think tank’s Three Year Action Agenda said. “The cumulative result of these measures would be an increase in the tax compliance and an expansion in the tax base. Going forward, this will lead to an increase in the direct tax-to-GDP ratio.”

The Aayog has forecast direct tax to GDP ratio at 5.8 per cent, 6 per cent and 6.3 per cent in 2017-18, 2018-19, and 2019-20 respectively, compared to 5.6 per cent in 2016-17. According to the Aayog, the indirect tax to GDP ratio will rise progressively to 5.7 per cent, 5.8 per cent and 5.9 per cent in 2017-18, 2018-19 and 2019-20 respectively as against 5.6 per cent in 2016-17.

The government has taken several steps to curb black money, such as disclosure of foreign assets, Benami Property Act and amendments in double taxation avoidance pacts with Mauritius, Singapore and Cyprus.