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CHAPTER 5

GROWTH OF INCOME TAX REVENUE IN INDIA
The economic crisis of 1991 led to structural tax reforms in India with main
purpose of correcting the fiscal imbalance. Subsequently, the Tax Reforms Committee
headed by Raja Chelliah (Government of India, 1992) and Task Force on Direct
Taxes headed by Vijay Kelkar (Government of India, 2002) made several proposals
for improving Income Tax System. These recommendations have been implemented
by the Government in phases from time to time. The main objective of these reforms
has been to enhance tax revenue by enlarging tax base, encouraging voluntary tax
compliance and simplifying procedural rules. This chapter examines growth of
income tax revenue on the basis of following parameters:
 Significance of income tax revenue in the Indian tax structure
 Category-wise growth in number of personal assessees and corporate
assessees
 Growth in income tax revenue
 Income tax to Gross Domestic Product (GDP) ratio
 Tax buoyancy coefficient
 State-wise share and growth of income tax revenue
 State-wise income tax to State Domestic Product (SDP) ratio

5.1 INDIAN TAX STRUCTURE
Tax structure refers to the various taxes that constitute the tax system of a
country, broadly comprising of direct and indirect taxes. Income tax and wealth
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tax are the main direct taxes while excise duty and custom duty are the main
indirect taxes of the central Government of India. Income tax can be categorised
in two parts viz. Personal Income Tax and Corporate Tax. Income tax levied on
individuals, hindu undivided families (HUFs), firms, association of persons
(AOPs), body of individuals (BOIs), local authorities and artificial juridicial
persons is called Personal Income Tax and income tax levied on companies is
called Corporate Tax. Table 5.1 presents revenue collected from the various
direct & indirect taxes and their respective share in total tax revenue of the
central Government.

TABLE 5.1
DIRECT AND INDIRECT TAX REVENUE OF CENTRAL GOVT.
(Rs. in crores)
Direct taxes
Years
1997-98
1998-99
1999-00
1999-00
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08

Personal
Corporate
income
tax
tax
17101
20016
(12.28)
(14.38)
20240
24529
(14.07)
(17.06)
25655
30692
(14.94)
(17.87)
31764
35696
(16.84)
(18.93)
32004
36609
(17.11)
(19.57)
36866
46172
(17.05)
(21.35)
41387
63562
(16.40)
(25.18)
49268
82680
(16.21)
(27.21)
55985
101277
(15.38)
(27.82)
75079
144318
(15.94)
(30.64)
102655
192911
(17.43)
(32.76)

Other
taxes
11163
(8.02)
1831
(1.27)
1612
(0.94)
845
(0.45)
585
(0.31)
50
(0.02)
140
(0.06)
823
(0.27)
7954
(2.19)
10784
(2.29)
16647
(2.83)

Indirect taxes
Total

Excise
duty

Custom
duty

Other
taxes

Total

48280
(34.68)
46600
(32.41)
57959
(33.75)
68305
(36.22)
69198
(36.99)
83088
(38.42)
105089
(41.64)
132771
(43.69)
165216
(45.39)
230181
(48.86)
312213
(53.02)

47962
(34.45)
53246
(37.03)
61902
(36.04)
68526
(36.33)
72306
(38.65)
82310
(38.06)
90774
(35.97)
99401
(32.71)
110665
(30.40)
117088
(24.86)
122711
(20.84)

40193
(28.87)
40668
(28.28)
48420
(28.19)
47542
(25.21)
40096
(21.43)
44852
(20.74)
48629
(19.27)
57566
(18.94)
65050
(17.87)
86304
(18.32)
102852
(17.46)

2791
(2.00)
3288
(2.29)
3470
(2.02)
4231
(2.24)
5461
(2.92)
6016
(2.78)
7891
(3.13)
14134
(4.65)
23053
(6.33)
37484
(7.96)
51133
(8.68)

90946
(65.32)
97202
(67.59)
113792
(66.25)
120299
(63.78)
117863
(63.01)
133178
(61.58)
147294
(58.36)
171101
(56.31)
198768
(54.61)
240876
(51.14)
276696
(46.98)

Total
tax
revenue
139226
(100.00)
143802
(100.00)
171751
(100.00)
188604
(100.00)
187061
(100.00)
216266
(100.00)
252383
(100.00)
303872
(100.00)
363984
(100.00)
471057
(100.00)
588909
(100.00)

Source: Compiled from Reports of Comptroller and Auditor General of India of relevant years.
Note: Figures in parentheses represent percentage share in total tax revenue of the central Government.

FIGURE 5.1
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there is a structural shift in composition of tax revenue of central Government in favour of direct taxes from 107 . excise duty and custom duty declined from 34.68 per cent in 1997-98 to 53.87 per cent in 1997-98 to 20.1 shows that relative significance of various taxes has changed during the study period. Share of corporate tax in total tax revenue of the Government showed an increasing trend throughout the study period. share of major indirect taxes i.02 per cent in 2007-08.38 per cent in 1997-98 to 32.e.98 per cent in 2007-08.28 per cent in 1997-98 to 17.43 per cent in 2007-08.32 per cent in 1997-98 to 46.PERCENTAGE SHARE OF DIFFERENT TAXES IN TAX REVENUE OF GOVERNMENT 100% 90% 80% Percentage 70% 60% 50% 40% 30% 20% 10% 0% 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Years Corporation tax Personal income Other direct taxes Excise duty Custom duty Other indirect taxes Table 5.46 per cent respectively in 2007-08. The share of total direct taxes increased from 34.76 per cent in 2007-08. On the other hand. whereas the share of indirect taxes decreased from 65.94 per cent in 2006-07 and again increased to 17.45 per cent and 28. then declined to 15. Thus.84 per cent and 17.05 per cent in 2002-03. It can be seen from the table that share of personal income tax in total tax revenue of the Central Government increased from 12. It increased from 14.

09 0.41 (96.03) (100) 7.2 and Table 5.80) (3.63 22.07) (100) 243.18 0.05) (100) 258.96) (0.79 2.29) (0.22 5.47) (0.30 (92.05 0.07 9.26) (1.15 195.62 2.68 (95.79) (0.27) (0.02) (1.12 288. Government has tried to achieve it through introduction of economic criterion for filing income tax return in 1997-98 (withdrawn in 2006-07).65) (100) 287.89 0.3 respectively.9 41.15) (100) 162.28 11.95 (88.25 168.87 5.46 21.13) (100) 255. introduction of Annual Information System etc.98 281.22 0.83) (0.72) (100) 273.95 (90. This can be considered as a positive development on the assumption that direct taxes are more equitable in impact and pro-poor as compared to indirect taxes.79 0.72 0. expansion of TDS base.30) (0.10) (9.10) (5.30) (0.84) (7.19 23.58 0.36) (0.96 (88.81) (12.16 226.46) (0.04) (100) 243.57) (0. 2 Rs.46 0.08) (100) 216.2 INCOME -WISE NUMBER OF PERSONAL INCOME TAX ASSESSEES (Number in lakhs) Taxable income Search & Total Below Rs.91) (0.87) (0.39 0.45 7.00 308.77 (94.66) (0.92) (8.96 1.26) (0.32) (4. The number of personal income tax assessees and corporate assessees under various taxable income categories is given in Table 5.52) (0.36 Source: Compiled from Reports of Comptroller and Auditor General of India of relevant years.10 seizure lakh lakh lakh 122.88 2. Year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 EGR TABLE 5.31) (0.31) (1.26 1.1).00 (90. 108 .13 293.67 (95.indirect taxes (see Figure 5.57 (95.14 267. 5.15 0.30 27.50 14.06) (100) 265.5) (0.33 258.19 128.49 0.90 5.65 (86.1 331.67 1.47 2.73 0.46) (9.08) (7.31 8.21 5.32) (0.98 27.59) (3.49 0.15) (100) 187. 2 lakh -10 Above Rs.2 GROWTH IN TAX BASE The base of income tax structure is a crucial factor affecting the tax revenue. Note: Figures in parentheses represent percentage share in total number of assessees.25 21.32) (3.

2 lakh -10 lakh‟ increased from 5.FIGURE 5.28 per cent during the corresponding period.10 lakh 60% Rs.90 lakh at an EGR of 7.2 depicts that the percentage share of assessees belonging to taxable income „below Rs.17 lakh at an EGR of 1. Figure 5.10 lakh‟ increased from 0.39 lakh to 2.10 lakh‟ was very low as compared to overall growth rate.26 per cent. EGR in case of assessees having income „above Rs.57 lakh in 1997-98 to 331.36 per cent.19 per cent and assessees having income „above Rs.47 lakh in 2007-08 by registering EGR of 23. Assesees belonging to taxable income „Rs. 2 lakh‟ increased from 122.81 per cent in 2007-08 and share of assessees 109 . assesses having income „below Rs. Further.65 lakh in 2007-08 at an EGR of 8.2 INCOME-WISE DISTRIBUTION OF PERSONAL ASSESSEES Percentage 100% 80% Above Rs.59 per cent of total assessees in 1997-98 to 86. Thus.09 lakh in 1997-98 to 41. 2 Lakh 20% 19 97 19 -98 98 19 -99 99 20 -00 00 20 -01 01 20 -02 02 20 -03 03 20 -04 04 20 -05 05 20 -06 06 20 -07 07 -0 8 0% Years Table 5. 2 lakh‟ decreased from 95. 2 lakh -10 lakh 40% Below Rs.2 highlights that total number of personal income tax assessees increased from 128.90 lakh to 287.

98 lakh in 2007-08 at an EGR of 4.49 (54.10 lakh‟ increased from 0.97) (100) 2000-01 1.06 per cent.09) (0.28) (0.68) (10.41 0.05 1.61 0.64) (9.10 50000 lakh 1997-98 1.64) (31.45) (30.02 4.39 0.34) (10.87 lakh to 1.10 lakh‟ showed a negligible increase i.55) (17.91 1.14) (35.22 0.02 3.85) (0.00) (0.00 (51.34 0.83 1.50) (100) 2007-08 3.19 0.85 per cent.99 1.14 3.25) (17.34 (58.3 INCOME -WISE NUMBER OF CORPORATE ASSESSEES Year Taxable income Rs.25 0.38) (28.74) (10.96 10.e.02 3.66 in 2007-08.73) (34.10 lakh‟ increased from 0.30) (0.03 3.16 1.40) (100) EGR 0.10 (58. TABLE 5.98 (63.25 lakh in 1997-98 to 0.65) (0.45) (24.53) (100) 2005-06 1.3 depicts that assessees having income „Rs.68 0.14) (0.05 1. share of assessees having income „above Rs.68) (3.02 3.02 2.95 0.92 0. Table 5.93 (50.74) (12.80 (53. However.14 3.55) (31. 50000-10 lakh (Number in lakhs) Search & Total seizure Below Rs.32) (14.03 3.91 0. 2 lakh -10 lakh‟ increased from 3.21 0.96) (9.75 lakh in 1997-98 to 4.24 0.02 2.65 (50.76) (33.68) (100) 1999-00 1.95) (31. Above Rs. Further.25 0.29 0.60) (100) 2001-02 1.73 4.96 (58.72 (53. 50000.06 -0.75 (58.96 per cent to 12.87 0.59 lakh in 2007-08 by registering EGR of 10.59 0.30 per cent in 1997-98 to 0.5 per cent during the corresponding period.82 0.68 0.81) (100) 2004-05 2. Note: Figures in parentheses represent percentage share in total number of assessees.74) (0.51) (100) 2006-07 2.54 0.30) (11.83) (0.85 Source: Compiled from Reports of Comptroller and Auditor General of India of relevant years.02 3.21 lakh at an EGR of 3.belonging to taxable income „Rs.96 0. Assessees belonging to taxable income „above Rs.3 0.25 0.02 4.60) (11.33 0.71) (29.73) (100) 1998-99 1. from 0.21) (0.57) (100) 2002-03 1.96 per cent while 110 .73 0.25) (31.44 0.3 highlights that total number of corporate assessees increased from 2.84) (100) 2003-04 2 1. Figure 5.

61 lakh to 3. whereas share of assessees belonging to taxable income „Rs.55 per cent and 9.3 INCOME-WISE NUMBER OF CORPORATE ASSESSEES 3.14 per cent during the corresponding period.50000 -10 lakh‟ decreased from 31.5 Above Rs.4 highlights that total tax revenue of central Government increased from Rs.5 Number in lakhs 3 2.assessees having „below Rs. FIGURE 5.5 Below Rs.3 GROWTH IN INCOME TAX REVENUE Table 5. 50000‟ increased from 1.10 lakh‟ increased from 58. 50000 2 Rs.64 per cent in 1997-98 to 24. 588909 crore in 2007-08 at 111 . 50000 -10 lakh 1. 5. EGR in assessees in the income category „above Rs.30 per cent in 2007-08.45 per cent and 11.10 lakh 1 0.5 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 0 Years Thus.85 per cent respectively in 2007-08.16 lakh at an EGR of 0. Percentage share of assessees belonging to taxable income „below Rs. 139226 crore in 1997-98 to Rs.09 per cent of total assessees in 1997-98 to 63.10 lakh‟ was higher as compared to overall growth rate. 50000‟and „above Rs.

72 68613 1.73 Corporate tax Amount 20016 24529 30692 35696 36609 46172 63562 82680 101277 144318 192911 17.98.39 131948 25.40 19.76 15.18 219397 39.67 Total tax revenue Amount 139226 143802 171751 188604 187061 216266 252383 303872 363984 471057 588909 15.61 16.13 16.0798 99 00 01 02 03 04 05 06 07 08 Years growth rate of corporate tax growth rate of personal income tax growth rate of total tax revenue 112 .04.19 12.36 26.02.67 Total income tax Amount GR 37117 44769 20.06.78 29.4 GROWTH IN INCOME TAX REVENUE (Rs.4 TRENDS IN GROWTH OF INCOME TAX 50 Percentage 40 30 20 10 0 -10 19 19 19 20 20 20 20 20 20 20 20 97.12 37.56 26.00.03.72 21.86 67460 19.09 GR 3.99.05.42 25.62 56347 25.81 -0.44 9.44 GR 22.55 25.82 15.01.73 157262 19.70 20. FIGURE 5.08 22.51 295566 34. in crores) Personal income tax Amount GR Year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 EGR 17101 20240 25655 31764 32004 36866 41387 49268 55985 75079 102655 24.50 33.75 23.71 83038 21.02 104949 26.04 13.66 30.64 18.11 36.02 Source: Compiled from Reports of Comptroller and Auditor General of India of relevant years.TABLE 5.29 19.81 0.26 19.30 2.49 42.63 34.

09 per cent.40 in 1997-98 to 1. It indicates the percentage of national income that is collected by the Government in form of tax revenue.5 113 .5 presents income tax to GDP ratio from 1997-98 to 2007-08.52 in 2000-01.44 respectively.an exponential growth rate (EGR) of 15. Corporate tax to GDP ratio increased from 1.40 in 2001-02 and again increased to 2.20 in 1997-98 to 1.71 in 2000-01. The Table shows that personal income tax to GDP ratio and corporate tax to GDP ratio have shown an upward trend during the study period. Table 5. Both personal income tax and corporate tax registered lowest growth rate of 0. 5.50 per cent in 2006-07. personal income tax as well as corporate tax increased at a higher EGR as compared to that of total tax revenue (see Figure 5.56 respectively in 2001-02.18 in 2007-08. declined to 1.73 per cent in 2007-08 and corporate tax showed highest growth rate of 42. Simple growth rates over the previous years for personal income tax and corporate tax fluctuated during the period under study. Thus. declined to TABLE 5.4). Revenue from personal income tax and corporate tax increased from Rs. So. 20016 crore in 1997-98 to Rs. Personal income tax to GDP ratio increased from 1.4 TRENDS IN INCOME TAX TO GDP RATIO Level of taxation in a country can be judged from its tax to GDP ratio. 102655 crore and 192911 crore in 2007-08 at an EGR of 24. Personal income tax registered its highest growth rate of 36. 17101 crore and Rs.76 and 2.64 and 17. higher the ratio better it is for the economic development of the country.

23 2001-02 32004 36609 68613 2282143 1.29 2007-08 102655 192911 295566 4713148 2.22 2005-06 55985 101277 157262 3580344 1.18 4.60 1998-99 20240 24529 44769 1612383 1.27 in 2007-08. Percentage of personal income tax to GDP Percentage of corporate tax to GDP FIGURE 5.36 2003-04 41387 63562 104949 2772194 1.39 2006-07 75079 144318 219397 4145810 1.71 3.INCOME TAX TO GDP RATIO (Rs.20 1. It is clearly 114 .40 2.01 in 2001-02 and again increased to 6.91 2000-01 31764 35696 67460 2089499 1.01 2002-03 36866 46172 83038 2469564 1.78 1999-00 25655 30692 56347 1936831 1. then declined to 3.60 in 1997-98 to 3.81 3.83 4.64 4.52 1.49 2. On the whole income tax to GDP ratio increased from 2.60 3.5 TAX TO GDP RATIO 7 Percentage 6 5 4 3 2 1 0 19 9798 19 9899 19 9900 20 0001 20 0102 20 0203 20 0304 20 0405 20 0506 20 0607 20 0708 Years Percentage of personal income tax to GDP Percentage of corporate tax to GDP Percentage of total income tax to GDP 1.40 1.09 in 2007-08.52 2.58 2.49 1.60 in 2001-02 and again increased to 4.58 2.48 5.27 Source: Compiled from Reports of Comptroller and Auditor General of India of relevant years.32 1.26 1. in crores) Percentage Personal Total Corporate of total Years income income GDP tax income tax tax tax to GDP 1997-98 17101 20016 37117 1426670 1.79 2004-05 49268 82680 131948 3126596 1.23 in 2000-01.29 3.09 6.56 2.87 3.

16 2.46 2.98 3.23 1.18 in 115 .01 2005-06 55985 101277 157262 3580344 0.07 2.69 2. if it is greater than 1.50 2001-02 32004 36609 68613 2282143 0.02 2. it indicates more than proportionate response of the tax revenue to rise in GDP. 5.18 2.flexibility in the tax structure.85 3.41 1. Further.5).6 TAX BUOYANCY Buoyancy coefficient Personal Year GDP Corporate Total income income tax tax tax 1996-97 18234 18567 36801 1361709 1997-98 17101 20016 37117 1426670 -1.5 TAX BUOYANCY Tax buoyancy is an indicator to measure efficiency in revenue mobilisation in response to growth in GDP.01 2.30 2.56 2003-04 41387 63562 104949 2772194 0.64 0. It is computed by dividing the percentage change in tax revenue by the percentage change in GDP over the period. corporate tax and total income tax have been given in Table 5.46 2.28 2000-01 31764 35696 67460 2089499 3.68 2.15 2004-05 49268 82680 131948 3126596 1.73 1.evident that corporate tax to GDP ratio remained higher as compared to personal income tax to GDP ratio throughout the study period (see Figure 5. If tax buoyancy is high.27 0.31 1.50 2007-08 102655 192911 295566 4713148 2.32 2006-07 75079 144318 219397 4145810 2.58 1999-00 25655 30692 56347 1936831 2.19 2002-03 36866 46172 83038 2469564 1. it indicates built-in.55 1.6 TABLE 5.38 2. Buoyancy coefficients of personal income tax. Buoyancy coefficient of income tax increased from 0.18 1998-99 20240 24529 44769 1612383 1.6 reveals that income tax has shown high degree of responsiveness during the study period.54 Source: Compiled from Reports of Comptroller and Auditor General of India of relevant years Personal income tax Corporate tax Total income tax Table 5.94 1.08 0.

It was greater than 1 during the study period except in 1997-98 (0.1997-98 to 2. So. Thus. it increased to 3.19) (see Figure 5. corporate tax has shown more buoyancy as compared to personal income tax during the study period.31 in 1997-98 indicating negative response to growth in GDP. Then. Personal income tax buoyancy coefficient remained fluctuating during the study period.02 in 2000-01.5 Total income tax 1 0.6 BUOYANCY COEFFICIENT OF INCOME TAX 3 2. it was greater than 2 in 7 years out of 10 years.68 in 2007-08.6).08 in 2000-01 and rose to 2. It was -1.5 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 1996-97 0 Years Moreover. FIGURE 5.27). it showed highest buoyancy coefficient of 3. again declined to 0. it was greater than 2 in 6 years out of 10 years. 116 .54 in 2007-08.02 in 2000-01.5 2 1. In case of corporate tax buoyancy coefficient was greater than 1 during study period except in 2001-02 (0. Moreover.18) and 2001-02 (0.

economic.7 and Table 5.5.8 present state-wise share and tax to State Domestic Product (SDP) ratio respectively during the study period. Table 5.6 STATE-WISE GROWTH OF INCOME TAX REVENUE In our country. political and social conditions vary from state to state. 117 . Thus. it is an important issue to analyse state-wise income tax performance for understanding fiscal management of Indian economy.

27 (0.53 (2.57 (8.93 (0.19 (0.93) 157262 2006-07 9906.21 (3.12) 3546.41 (2.66) 25409.7 STATE-WISE SHARE AND GROWTH OF INCOME TAX REVENUE (Rs.25) 920.19 (1.70 (0.96 (6.06 (0.53) 1656.57 (35.77 (0.50) 2139.48 (0.66) 1282.06 (36.85 (8.94) 5064.89 (0.03 (0.85) 2085.32 (1.27) 10551.95 (7.22) 108.7 (4.32) 3288.2 (0.45) 980.98 (1.90) 1311.21) 704.61 (6.66 (16.82) 82.55 (3.98 (1.8 (1.51) 31463.39) 25281.22) 8167.8 (1.69) 295566 Mean 4351.60) 738.51 (2.79 (0.40) 40567.06) 3072.31 (1.15) 523.90) 1620.76) 1153.14 (1.41) 1847.46) 843.71) 455.68 (0.08 (15.6 (4.31) 2706.11) 801.56 (4.81) 117635 (39.28 (1.98) 1736.76) 645.37) 2080.48 (1.47 (0.46 (1.19) 2713.95 (1. in crores) State Andhra Pradesh Assam Bihar & Jharkhand Goa Gujarat Haryana HP J&K Karnataka Kerala MP & Chattisgarh Maharashtra Delhi Orissa Punjab Rajasthan Tamil Nadu UP & Uttaranchal West Bengal Union Territories Other States Total 1997-98 1193.45) 644.42 (1.20) 273.16) 1695.45 (0.08 (0.64) 12215.41) 83038 2003-04 3840.51) 4332.23 (3.73 (0.23) 408.01) 1567.86 (1.61 (0.65) 16139.27) 1595.24 (2.91) 5360.58 (15.57 ource: Compiled from Reports of Comptroller and Auditor General of India of relevant years.26) 8275.07) 2689.69 (2.44 (3.52 (4.88 (0.79 (0.71 (0.84) 1096.18) 5237.08) 2400.79 (6.82 (0.02) 254.47) 1459.26) 2380 (4.80) 157.92 (0.33) 230.73 (0.09 (3.64) 439.95) 56347 2000-01 2468.92) 1111.05 (1.98 (0.83) 2124.76 (2.02) 7765.44 (37.65 (1. Note: Figures in parentheses represent percentage share in total income tax revenue of central Government.4 (4.64 (0.42) 1286.75 (0.29 (0.38 (0.20) 53.54 (1.36 (1.14 (1.99 (1.33) 10434.39 (36.40) 367.98) 6851.26) 2633.57) 11664.09 (0.44 (4.17) 1867.74) 8910.29) 22673.96 17.61 (0.84 (1.23 (0.40) 2037 (0.35) 1969.51 (18.63 (0.19) 208.98) 303.84) 203.05) 3372.43 (7.65) 1645.29) 2506.98) 4330.91 29.33) 5323.23 (1.55) 1954.81 (1.91) 806.24 (1.94) 748.25 15.62 (3.3 (1.97) 44769 1999-00 1779.82) 2161.15) 13610.17) 1049.33) 6313.61 (0.18 (36.41) 1405.89) 13211.9 (40.97 (1.34 (3.99) 1069.09) 649.64) 713.75 (3.75) 230.67 (4.95) 1180.77 (3.88) 13514.48) 541.13) 1205.53 (2.44) 7136.83 27.20) 8079.7 (3.98) 563.51) 5564.75) 17378.48 (4.67 (1.16 (1.29 (15.26 (0.7 (6.44 (16.53 (0.66) 815.02 (1.93 (1.06 (0.44 (3.36 (0.26) 41205.11) 3320.49) 1264.61 (3.43 (2.61) 67460 2001-02 2581.52) 1818.41) 1396.9 (0.00 24.50) 1101.79 (1.16) 10452.47) 4005.42) 25967.11) 605.77) 7235.55 (1.01) 568.01 (3.17) 3238.69) 1689.20) 1096.05 (1.49) 10059.04 (0.51 (6.66) 2717.97 (1.13 (8.TABLE 5.20) 37117 1998-99 1351.9 (5.02 (6.72 (1.17) 18362.83 (0.49 (1.18 (2.40) 409.56 19.55 (1.46 (8.18) 217.42) 1083.77) 651.34 (6.94 (6.26 (1.52) 884.81 (0.60) 4968.34) 68613 2002-03 2874.84) 711.85 (0.98 (0.95 (1.69) 282.29) 9494.57) 358.17 (0.24) 131948 2005-06 6537.34 (1.72) 3219.43 (8.33 (40.16 (0.84) 79691.2 (4.96 (1.95) 4040.37 (1.51 (1.22) 227.94 (4.54) 20197.34 (8.72 (4.23 12.04) 4254.36 (1.85 (38.6 (0.44) 3052.19) 245.14) 55654.11 (4.93 (1.68 (1.42 (3.65) 2087.79 (3.42) 8316.73) 121.04 20.84) 429.95 (2.26) 1007.44) 2521.09) 179.16 (1.82) 797.28 (1.11) 13724.27 (1.63) 760.89) 17979.39) 2484.90) 355.66) 749.40) 4691.31 (1.09) 17785.40) 569.03) 140.12 (0.47) 1521.96) 3287.91 (6.60) 1126.92) 1744.40 (1.82 22.83 15.95 (7.77) 282.51 (1.69 (0.77) 1649. 117 .66) 1493.16) 359.76 (1.55 (0.83) 1983.68 (0.54 (0.65 (4.12) 2640.60) 1826.49) 4980.46 (1.85 (0.97 (6.04 (3.97) 14286.97 (7.69) 219397 2007-08 13448.43 (1.65) 2520.18) 792.38) 1399.79 (0.97 (0.18 (3.49 (0.54 (1.54) 515.04) 159.97 (16.31) 4004.32) 37219.31) 2199.92) 2132.68 (0.53) 840.45 (4.3 (15.22) 104949 2004-05 4823.03 22.13) 1553.41) 1369.02 (1.43 18.32) 597.67 (1.29 (5.15) 1770.33 (1.08) 1556.33) 7326.18) 697.79 (1.51 (4.68) 6052.91) 941.27) 492.33) 1041.45) 1275.49) 48218.58) 5882.78 (0.33) 1482.73 (0.2 (4.90 (7.56 (4.73 (37.51 (14.28) 1656.24) 3548.46 21.62 (4.33 (0.27) 3640.19) 345.23) 215.99 (1.90) 207.34) 3773.55) 1926.93) 150.14) 111095.22) 941.16 (0.93 (0.74 (1.13) 4441.1 (4.63 (10.80) 44465.00) 5696.57 (37.78) 144.94 8.91 (1.67) 1692.51) 13803.47) 471.67 (6.63) 880.01 44.71 (0.24 (0.65 (4.06) 488.94 (3.05 (38.44 (18.87 (0.85) 5176.46) 521.07) 196.18) 29754.12 (1.28) 9124.71 (1.67 (5.56) 1291.22) 4463.6 (0.19) 77.31) 6746.09 (1.20) 240.49) 1629.36 (0.72) 11637.04) 169.51 (16.15) 238.82) 73.87 (0.25 (1.79 (4.05) 2089.03) 11050.1 (6.25) 251.39 (0.58 (5.64 34.45 (0.93 (1.93 (0.44 (1.17 34.00) 1085.39 (1.43 (6.99 (0.02) 857.06 (0.61) 345.57 (1.35) 1434.75 (4.28 (4.62 22.5 (6.00 EGR 27.59) 1169.36 22.16 14.19) 375.45) 1633.74 (7.90) 867.67 (0.57 (16.30) 162.

FIGURE 5.7 SHARE OF VARIOUS STATES IN INCOME TAX REVENUE 119 .

Orissa. (See Figure 5. The group of states like Bihar.09 %) towards total income tax revenue of the central Government. 303. Karnatka. Goa. 120 . Karnataka and Tamilnadu.99 crore in 1997-98 to Rs. Maharashtra. J&K and Himachal Pradesh made the lowest contribution. Goa.7) Analysis of EGR reveals that highest growth rate was achieved by Goa whose income tax revenue increased from Rs. It was followed by Haryana whose income tax revenue increased from Rs. Orissa. The states of West Bengal. Next group of states include Uttar Pradesh & Utranchal. Punjab. 1311. Further.83 per cent. Gujarat and Madhya Pradesh & Chhatishgarh generated revenue in the range of 2 per cent to 5 per cent of total income tax revenue of the central Government. Andhra Pradesh.32 crore in 2007-08 at an EGR of 34.91 per cent. as their average contribution remained below 1 per cent towards total income tax revenue during period under reference. State of Punjab experienced the lowest EGR of 12. The average share of Rajasthan.7 shows that during the study period Maharashtra made average highest contribution (37. Bihar & Jharkhand. around 54 per cent of the income tax revenue of the Central Government was contributed by these two states during the study period. whose contribution varied between 6 per cent and 8 per cent of central Government income tax revenue.48 crore in 1997-98 to Rs. Kerala. Andhra Pradesh. Haryana and Assam states varied between 1 per cent and 2 per cent of total income tax revenue of the central Government.01%). Thus. Rajasthan and Tamilnadu observed higher EGR than overall EGR of the country and the remaining states performed at a lower EGR during the study period.Table 5.67 per cent during the corresponding period (Table 5. Gujrat. Delhi. Assam. total income tax revenue at all India level increased at EGR of 21.70 crore in 2007-08 at an EGR of 44.82 per cent. 563.150.4). followed by Delhi (16.

32 1.93 2.04 1.15 2.00 3.48 3.89 2.06 2.90 9.22 1.40 1.31 2.25 2.20 3.40 -1.21 12.28 1.80 1.76 0.99 Punjab 1.82 2.50 4.42 1.11 2.88 3.97 5.56 0.80 16.97 1.20 1.15 1.82 18.31 2.40 1.67 5.83 18.89 7.67 3.74 2.52 1.91 0.86 1.01 MP & Chattisgarh 1.89 2.76 0.41 2.31 1.01 1.99 3.69 1.73 3.35 9.37 4.67 6.22 4.80 2.65 1.62 4.8 STATE-WISE INCOME TAX TO STATE DOMESTIC PRODUCT RATIO States 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Mean EGR Andhra Pradesh 1.25 4.68 4.79 0.04 3.14 3.74 8.31 Goa 2.10 4.14 1.35 2.79 2.11 2.92 2.72 22.12 18.86 10.62 4.48 0.99 7.56 Source: Compiled from Reports of Comptroller and Auditor General of India of relevant years.64 0.00 0.83 4.43 2.48 1.97 1.32 4.52 Rajasthan 0.30 10.46 3.95 U.22 1.79 4.77 Karnataka 2.30 2.08 1.97 1.93 0.41 7.70 2.08 5.04 1.62 15.TABLE 5.37 3.08 7.29 7.41 7.82 HP 0.18 1.14 4.61 1.99 7.93 1.01 1.88 Maharashtra 7.32 23. 121 .39 3.43 Tamil Nadu 2.58 1.82 1.88 1.15 1.43 4.03 24.99 2.16 20.17 13.03 6.63 West Bengal 1.24 2.05 3.31 7.08 26.83 1.27 3.80 12.02 2.78 0.11 1.04 4.64 17.77 2.40 3.51 14.50 3.67 1.64 6.01 4.39 5.17 3.67 11.14 2.61 4.47 4.59 2.19 6.88 5.03 1.71 2.85 2.65 1.96 1.44 11.41 7.36 8.71 3.86 3.05 1.06 6.Territories 3.33 4.93 1.30 1.05 1.16 4.27 14.61 6.29 J&K 0.57 1.37 1.15 6.05 5.81 1.03 UP & Uttaranchal 1.64 4.38 3.59 3.47 2.57 2.92 2.91 Orissa 1.35 3.08 10.52 3.84 2.93 0.50 2.13 2.15 Delhi 15.43 20.86 0.30 3.28 1.94 4.12 2.66 1.36 4.86 5.12 4.17 3.99 3.52 1.24 10.62 1.19 1.51 1.87 6.56 0.91 1.65 3.81 2.65 Assam 1.60 3.55 4.05 1.04 1.06 22.10 8.64 1.50 1.59 3.20 3.86 1.38 Bihar & Jharkhand 0.89 8.41 3.58 3.28 5.24 1.53 1.72 1.90 8.81 1.43 1.33 1.61 1.53 33.10 4.65 5.59 2.98 6.24 Gujarat 2.42 1.75 19.35 Mean 2.30 13.41 1.64 8.46 5.00 12.95 2.47 1.33 10.24 3.59 Kerala 1.39 14.22 2.52 14.00 2.98 1.20 1.62 1.49 2.75 1.55 3.31 Haryana 0.20 32.70 3.79 14.21 10.06 1.79 0.32 13.23 12.13 2.58 0.62 15.47 1.51 Other states 8.

8 STATE-WISE INCOME TAX TO SDP RATIO 122 .FIGURE 5.

J&K.56 per cent.59 per cent.P. Karnataka. State of Kerla experienced the lowest EGR of 4. H.. Analysis of EGR reveals that mean income tax to SDP ratio increased from 2.61 in 2007-08 at an EGR of 20. The states of Tamil Nadu and Goa witnessed medium level and above medium level performance with income tax to SDP ratio of 4. Madhya Pradesh.25 in 1997-98 to 14.75 per cent respectively.08 per cent and 5. whose income tax to SDP ratio increased from 2.91 during the corresponding period.. Haryana. Further. The states 123 .16 in 2007-08 at an EGR of 9. The highest growth rate was experienced by Karnataka. H.8 highlights that the states of Karnataka.Table 5.8 presents state-wise income tax to SDP ratio during the period 1997-98 to 2007-08. P. Haryana and U P & Uttaranchal.01 per cent. Rajasthan and Tamilnadu showed continuous growth in income tax-SDP ratio during the study period. Whereas. Orissa. West Bengal. Figure 5. The next category of states which showed below average performance (income taxSDP ratio between 2 to 4 per cent) include Andhra Pradesh. It was followed by Goa whose income tax to SDP ratio increased from 2. Low income tax to SDP ratio for states like Bihar & Jharkhand. whose income tax to SDP ratio increased from 1. Punjab and Rajasthan remained worst performing whose average income tax to SDP ratio was below 2 per cent. Delhi and Maharashtra remained best performing states whose average income tax to SDP ratio was above 6 per cent.88 in 2007-08 at an EGR of 19.89 in 1997-98 to 12.24 per cent.79 in 1997-98 to 7. Assam. Keral. J & K and Rajasthan may be due to large number of non tax paying population. the states of Delhi.28 to 1. the states of Bihar & Jharkhand.

Goa and West Bengal also showed continuous growth in income tax-SDP ratio during the study period except 2001-02. The number income tax assesses.of Andhra Pradesh. Maharashtra. The foregoing analysis reveals that tax reforms introduced during nineteen nineties succeeded in changing the composition of tax structure in India in favour of direct taxes. Maharashtra and Delhi remained best performing states in terms of share in total income tax revenue and income tax to SDP ratio. J & K and Himachal Pradesh experienced lowest average income tax to SDP ratio and made lowest contribution towards total income tax revenue as compared to other states during the study period. 124 . income tax to GDP ratio and buoyancy coefficient showed an upward trend. income tax revenue. The states Bihar & Jharkhand.