There is a progressive turnaround in tax collections after a long time

The Controller General of Accounts (CGA), which works under the finance ministry, has now released the central government’s fiscal numbers till September, which is the first half of the fiscal year. The numbers suggest that there has finally been a progressive turnaround in the tax burden as the share of direct taxes in the government’s gross tax revenue (GTR) has crossed 50% in the first half of the fiscal year for the first time since 2015.

While the share of direct taxes in GTR has been higher in the past, it has fallen over the past seven years. Because direct taxes – they include income tax and corporation tax – exclude the low-income groups and tax the rich at an increasing rate in proportion to their incomes, they are progressive in nature unlike indirect taxes, which tax the rich and the poor at the same rate.

(in first half of fiscal year)