Are taxes high in India? Here's where we stand

Are taxes very high in India? Or is the widening ambit of service tax creating such an impression... A global comparison, based on KPMG data, shows there are many countries where rates of indirect tax and personal income tax are much higher.

In fact, in several Nordic and other European countries the taxman takes away more than half the individual earnings, though that’s perhaps justified because those countries also have a strong social security net for citizens. However, India does rank among the top 10 in corporate tax rates.

But here again the scenario is set to change as the government has already stated its intention to cut corporate rates in the coming years. However, the more important issue for India is the need to raise its tax-to-GDP ratio, which is quite low as compared to other countries. Here’s a look...











^While sale of goods in India is liable to VAT/ CST, provision of services in India is liable to service tax. The standard rate of VAT ranges from 5% to 15% across states. Also, there are certain concessional VAT rates such as 5%, 1%, and 0%. Further, there are higher VAT rates of 20% and above (petroleum products). As regards CST, it is charged at the rate of 2% with Form C or VAT rate applicable in the originating state without Form C. In addition, there is another indirect tax on provision of services known as service tax, charged at 14.5%.

**Source: World bank