A study on Impact of Income Tax on the Revenue of Government of India

Abstract

This research assesses the revenue generation power of the government of India from different angles, especially income tax. The secondary data used here has been obtained from the central board of direct taxes (CBDT) of the ministry of finance. Multi-year study is designed in such a way as to discover year on year variations, trends and patterns in comparision to other heads of sources of income, especially the income tax. The study looks into the income tax data year on year, tax system and its changes, the status of the economy, and the changes in the revenue. In this case, the comparison approach is meant for ascertaining the possible re income taxation may afford the government with regard to the growing economy of India and its dynamic taxation regime. The study provides an overview of the association of income tax revenue with inflation, growth of GDP and employment ratios among other macroeconomic parameters. The insights gained from the results on the intricate tax policy makers who intend to make the best use of income tax for balancing the economy. The paper concludes with suggestions for further improving the efficiency of revenues and the equity of the income tax system.