CHAPTER – 3

RESEARCH METHODOLOGY
 CHAPTER – 3

RESEARCH METHODOLOGY

3.1 INTRODUCTION

Reforms are on-going process in any economy. Reforms are also the reaction
of the Government to the global political and economic changes. India has seen
significant tax reforms over the last two decades (Rao M.G 2005). Changes in tax
policy and necessary reforms in it generally affect the public as well as the revenue of
the Government either positively or negatively. Reforms in tax policy and
administration, changes the taxation system. Reforms that lead to changes in the
Income Tax system in India have affected the tax payer all the time. To Study the
impact of the reforms this study attempts to understand the tax payers’ attitude
towards the income tax system. It is equally important to understand the perspectives
of the tax authorities to throw light upon the impact of changes in tax administration
and the results of the reforms. The present research is an attempt to study the Income
Tax reforms in India and study the perception of income tax assessees and authorities.

With a view to understand the research problem, relevant literature relating to

income tax reforms has been reviewed. The literature survey has been presented in the
previous chapter. The studies relating to reforms in personal income tax, corporation
tax, reforms in tax administration, issues relating to tax evasion and black money,
compliance cost, recommendations of various committees on direct tax reforms up to
2015-16, have been covered in the literature review.

3.2 STATEMENT OF THE PROBLEM

Many studies pointed out the inefficiency of the Tax Department in enforcing
the tax law. Studies have pointed out that Corruption, and lack of information system
were the main reasons for low tax morale, low tax compliance, low revenue
mobilization. Despite notable reforms in Income Tax system, the total Income Tax
revenue generated was insufficient. India is a democratic country with only about 5.5
per cent of the people who are income earners paying tax and only 15.5 per cent of the
net national income reported to income tax authorities. The economic survey
estimates that only seven per cent of the Indian voters are tax payers, though it should
be closer to 23 per cent, 85 per cent of the net national income is outside the tax net

46
(Economic Survey 2016). This result shows that India is far from full income tax
payers country. Further, the Income Tax-GDP ratio is 5.6 per cent which is far below
that of the emerging market economies of 21 per cent and OECD average of 34 per
cent. Moreover, Indian Income Tax structure is plagued by many deficiencies. Income
tax burden is being fallen only on the Assessees falling in the second slab of 20 per
cent. Many studies highlighted the lacunae in incentives and exemptions. The
proposed Direct Tax Code is kept aside without considering its implementation. The
audit reports reveal many pending cases, excessive refund claims, increasing cases of
mistakes, escaping hard- to- tax group of people. Moreover, tax compliance is very
low as compared to other countries; tax morale is low; tax evasion is persisting and
the list continues. Tax administration needs to understand the reasons for low
compliance and dissatisfaction of public with the administrative machinery. Further,
the policy makers should realize the difficulties in enforcing the Tax reforms, since
Tax administration and Tax policy are inter-related each other. To a greater extent
both are very essential for the successful tax reforms in any economy. The present
study aimed to find conclusions for these issues and suggest measures for the same.
Hence, the researcher has undertaken the present study entitled “INCOME TAX
REFORMS IN INDIA-A STUDY BASED ON PERCEPTION OF INCOME TAX
ASSESSEES AND AUTHORITIES”.

3.3 RESEARCH QUESTIONS

Having identified the research problem, the researcher has framed the
following research questions in the pursuit of the study.

What are the income tax reforms from 2000-01 to 2015-16?

To what extent these reforms have been implemented in India?

Whether the revenue was increased after the reforms period?

Whether the performance of income Tax administration improved?

What are the perception of income tax authorities in the context of Income tax
policy and administration?

What are the perception of income tax assessees towards Income tax system,
income tax reforms and Tax administration?

How to improve the Tax administration and Tax Compliance to mobilize more
Income Tax revenue?

47
3.4 NEED FOR THE STUDY

The above stated specific issues have not yet been addressed in the early
studies on Income Tax Reforms. Tax reform is an ongoing process. Changes are
necessary since the social, political and economic conditions are dynamic in nature. In
the pursuit of maintaining consistency and continuity, there is dire need for regular
surveys so that it is possible to outline the existing gaps and future studies are to be
pursued accordingly (Goel; 1997). Bearing this in mind the researcher attempts to
examine the reforms in income tax system and administration in India.

3.5 OBJECTIVES OF THE STUDY

The study keeps the following research objectives to answer the research questions:

1. To study the Historical background of Income Tax system and Administration

in India.
2. To examine the Income Tax reforms in India from 2000-01 to 2015-16.
3. To study the growth of Income Tax Revenue from 2000-01 to 2015-16.
4. To evaluate the performance of Income Tax Administration.
5. To study the perception of Income Tax Assessees and Authorities towards the
Income Tax system and Administration.
6. To give suggestions to improve Income Tax system and Tax Administration,
on the basis of the findings of the study.

3.5.1 Hypotheses

Hypothesis 1:

H1 : Mean perception of the Assessees regarding the Income tax system is not the
same.

Hypothesis 2:

H1 : Mean perception of the Assessees regarding the rationalization and

simplification measures is not the same.

Hypothesis 3:

H1 : Mean perception of the Assessees on the difficulties in compliance is not the

same.

48
Hypothesis 4:

H1 : The perception of assessees regarding professional advice is not the same.

Hypothesis 5:

H1 : The mean perception of refund measures is not the same across four
jurisdictions.

Hypothesis 6:

H1 : The mean perception on Tax evasion is not the same across the jurisdictions.

Hypothesis 7:

H1 : There exists a significant agreement among the Assessees regarding the

reasons for tax evasion.

Hypothesis 8:

H1 : There exists a significant agreement among the Assessees regarding the Tax
incentives.

Hypothesis 9:

H1 : The mean perception of Assessee friendly measures is not the same.

Hypothesis 10:

H1 : The mean perception of Assessees towards TDS is not the same across the
jurisdictions.

Hypothesis 11:

H1: There exists a significant agreement among the assessees towards the Reform
results.

Hypothesis 12:

H1 : There exists a significant association between Occupation and usage of TRP

services.

Hypothesis 13:

H1 : Mean perception of Authorities towards H.R.M is not the same.

49
Hypothesis 14:

H1 : Mean perception of Authorities towards Income Tax System is not the same.

Hypothesis 15:

H1 : Mean perception of Authorities towards Income tax rationalization measures

is not the same.

Hypothesis 16:

H1 : There is a significant agreement among the authorities on major difficulties in

compliance.

Hypothesis 17:

H1 : There exists a significant agreement among the authorities on the reasons for
low tax-compliance.

Hypothesis 18:

H1 : There is a significant agreement among the authorities on the results of tax

reforms.

Hypothesis 19:

H1 : There is a significant agreement among the authorities towards TDS system.

Hypothesis 20:

H1 : There is a significant agreement among the authorities towards Tax Payer

Information Service.

Hypothesis 21

H1 : Mean perception of Authorities towards issues related to tax administration is

the same.

Hypothesis 22:

H1 : There exists a significant agreement among the authorities towards Suggestive

Measures to widen the tax base.

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3.6 SIGNIFICANCE OF THE STUDY

“Money alone is not enough for good government; but it is necessary.

Similarly, good tax administration is not sufficient in itself, but it is necessary for
effective and efficient domestic resource mobilization.”- Prof. Richard M Bird.

In a developing economy, Income tax is an important source of revenue to the

government. Income tax has undergone a drastic change in its structure over the last
two decades. Changes have been made continuously to suit the dynamic economic
situations. Despite several reforms and restructure of tax administration, the Income
Tax revenue as a percentage of GDP and Total tax revenue is only moderately
increased. The tax base has to be doubled. The numbers of income tax payers are six
percent of the total population. Morale of the tax payer is very low. Income tax
department and officials are overburdened. Tax collection and assessment procedures
need to be streamlined further.

Through the continuous efforts and consistent reforms in tax system and
administration, the government strives to enhance the competency of the economy at
the international level. Further, achieving of the socio-economic objectives of the
present situation requires sound taxation policy and efficient administration.
Obviously, a wide range of studies are significant in this area.

Research in Income tax reforms and administration provide a sound base for
future tax policy and administration. Thus, study of the present problem is very much
significant and rational in the light of the research gap and significance. Further, the
present study contributes to the literature and suggests in many ways to strengthen the
tax system, improving administrative machinery, increase the morale of both
assessees and authorities, increased attention of the government towards problem
areas of the structure and rationalizing it and moreover increase tax revenue required
for improving socio-economic conditions of the people.

3.7 SCOPE OF THE STUDY

Indian Tax system includes both Direct tax and Indirect Taxes. Reforms are
made in both the areas from time to time. Direct Taxes include Income tax on
individuals, tax on incomes of Companies. The present study encompasses reforms in
Income Tax and administration. The study evaluates the growth of income tax
revenue and performance of income tax department. Moreover, the scope of the study

51
looks into various aspects such as finding the ways for taking further steps towards
reform in Income Tax system and administration in India, find measures to expand the
taxpayer base, increase tax compliance, improve morale of taxpayers, determine ways
to increase share of Income Tax revenue at Central level, improve tax collection in
order to improve Tax-GDP ratio, determine measures to improve administration and
morale of tax authorities to make it efficient and effective. The study examines the
perception of Assessees and Authorities based on the sample drawn from Karnataka
state.

3.8 OPERATIONAL DEFINITIONS

Though not the list is exhaustive of all terms and concepts, major concepts
used in the study have been briefly explained. The following terminologies have been
operationalized in the context of the present study.

a) Taxation:

The terms ‘taxation’ ‘tax system’, system of taxation’ ‘tax policy’ are used
interchangeably. The terms signify the set of laws, rules and procedures related to
income tax assessment, investigation and related administrative functions. The terms
also include the whole network of persons connected to tax system viz., tax payers,
tax evaders, tax administrators and enforcing authorities. The taxation system also
signifies the ideology and rationale of income tax.

b) Income Tax:

Income tax is a direct tax collected by the Government of India on the Income
earned by those liable to pay tax as per the Income Tax Act 1961.

c) Tax Evasion:

Tax evasion means evading the income tax by a person, by total or partial
concealment of income for which he/she is liable to pay tax and /or incorrect claim of
exemptions, deductions and rebates.

d) Tax Enforcement:

Tax enforcement means the enforcing action in the form of scrutiny/ audits,
surveys and searches by the Indian Income Tax Authorities.

52
e) Perception of respondents:

In the present study, perception means the attitudes, opinions and experiences
shared by the sample respondents. Perception is not measured independently. But
reproduction of the personal accounts of the respondents on different issues discussed
in the study.

f) Tax compliance:

Tax compliance means conforming totally to the prescribed income tax rules
and procedures.

g) Assessee:

The term ‘assessee’ is interchangeably used with the term ‘respondent’

‘taxpayer’ ‘income tax assessee’. As per the provisions of Income Tax Act, assessee
means a person by whom income tax or any other sum is payable under the Income
Tax Act, and includes every person in respect of whom any proceedings under the Act
has been taken for the assessment of his/her income or loss and the amount of refund
due to him. Assesse for the study include Corporate and Non-Corporate Assessees.
For the present study, the Assessees include Individuals- Government employees,
Private employees, Self-employed or business person, Professionals such as
Advocates, Medical Practitioners, Chartered Accountants, Engineers and architects
who file the return of income for tax purposes and Hindu Undivided Family,
Partnership Firm (including Limited Liability Partnership) Company, Trusts, Others
including Association of persons or Body of Individuals.

h) Return of Income:

As per the Income Tax Act, every person, if his total income or the total
income of any other person in respect of which the assessee is assessable during the
financial year to which the income is related, exceeds the minimum amount which is
not chargeable to tax, is required to furnish a statement of his income. The return has
to be filed annually within due dates (July 31st for individual assessee), declaring the
true and correct income and receipts from all sources.

53
i) Exemptions and Deductions:

Exemptions mean income which are not chargeable to income tax or which are
exempt from income tax. Deductions mean income and expenses which can be fully
or partially deducted from the total income.

j) Income Tax Authorities:

All those officers or civil servants appointed by the Government or Income

Tax Department who are granted the authority by the Government and Income Tax
Act, to enforce Income tax policies, rules and procedures. In this study, Authorities
include PR.CCIT, CCIT, PCIT, DGIT, Assessing officer, Commissioner of Income
Tax, DITs, Income Tax Officer, and Income Tax Inspector, Tax Assistants, and
Notice servers.

k) Reform:

Any changes made by the Government or Body constitued with this regard, in
the areas such as Income tax policy or system as a tool for achieving socio-economic
objectives of the government by various Finance Acts. Reforms in Policy includes
income tax structure, rates, provisions, incentives, assessment, administration
procedures, organisational structure, powers, penalties that are applicable to Income
Tax system and administration are included in the term Reforms made during the
study period. The study includes reforms made in income tax policy and
administration after 2002 till 2015-16. Reforms include Policy changes made during
the Finance Acts for the said study period.

3.9 RESEARCH DESIGN

The present study is descriptive as well as exploratory in nature. The study

examines the Income tax system in India and also studies the opinion of the
stakeholders about the Income tax system and Income Tax Administration in the light
of the reforms which have taken place. The present study aims to study the perception
of income tax Assessees and Income Tax Authorities. For studying the perception of
Income Tax Assessees regarding the Income tax system and Income tax
administration, primary data was collected from the Assessees in Karnataka.

54
3.10 SAMPLE DESIGN

Assessees include Individuals, HUF, Firm, Company, Trusts and Others such
as AOP/BOI, local authority, etc. who are covered with in their respective Jurisdiction
of Principal Commissioner of Income Tax. Similarly, to study the perception of
Income Tax Authorities, primary data was collected from the Authorities ranging
from PR. CCIT to Income Tax Inspectors in the study area.

3.10.1 Sample size of Assessees

The study area chosen for the research was Karnataka, since Karnataka is the
residing state of the researcher. Further, the locations were selected on the ground of
availability of various resources for the study. The Authorities of the chosen Region
consists of one Principal Chief Commissioner of Income Tax (PR. CCIT) and Five
Chief Commissioner of Income Tax (CCIT) working under PR. CCIT, 14 Principal
Commissioners of Income Tax (PR.CIT), Commissioners of Income Tax (CIT/DIT),
Additional Commissioner of Income Tax (ADDL/JT CIT), Income Tax Officers
(ITO), and Inspectors of Income Tax (ITI).

In India, tax payers are classified on the basis of Geographic Location and
occupation (A. Dasgupta, et al., 2003). Therefore, sample selection was planned on
the basis of location of the tax payers. For the purpose of sample selection, the
researcher resorted to dis-proportionate random sampling framework for the selected
Jurisdictions. The researcher has identified and selected Four Jurisdictional locations -
Bengaluru, Mysuru, Hubballi, and Panaji, giving representation to the whole
Karnataka. Bengaluru Jurisdiction include ranges of both Bengaluru Rural and
Bengaluru urban; Mysuru Jurisdiction covers ranges of Mysuru urban locations,
Mysuru Rural Revenue Taluk-Mandya, Chamaraja Nagar, Kodagu, and Hassan
Revenue Districts; Hubballi jurisdiction covers the ranges of Hubballi Urban and
Rural Revenue Taluk-Kalaburgi, and Davanagere Districts; Panaji jurisdiction covers
ranges of Urban including Belagavi, and Mangaluru.

Tax payers are classified and identified in each range according to

Alphabetical order of the PAN. Geographical locations are covered in Bengaluru
jurisdiction based on the Postal Identification Number (PIN CODE). As per the
records of the Income Tax Department of Karnataka, the total number of 2501037
(Table 1.1, page no. 11) assessees were identified as population of the study.

55
However, the population of the chosen jurisdiction were 1874434 Assessees. Four
jurisdictions, based on larger number of tax payers, chosen initially for sample
selection. The table 3.1 shows the classification of the number of assessees in each
jurisdiction chosen. The determination of appropriate sample size need to be based on
the size of the population, the level of precision required, the level of confidence or
risk, and the degree of variability in the attributes being measured (Miaoulis and
Michener 1976).The sample size was based on Yamane formula (Yamane 1967).

Table 3.1: Status-Wise Number of Tax Payers in Sampling Area

Status/
Individual HUF Firm Company Trust Others Total
Jurisdiction
Bengaluru 1369692 29515 44330 27967 2398 3644 1477546
PCIT-Mysore 121470 3230 3601 625 662 1344 130932
PCIT-Hubballi 126367 2385 4929 567 114 929 135291
PCIT-Panaji 120652 66 5117 2889 855 1086 130665
Total 1738181 35196 57977 32048 4029 7003 1874434
Source: Data Obtained from Income Tax Department Bengaluru

Applying the above formula with an error of 5 per cent and for the 95% of
confidence level, the calculation from the population size of 2501037, the researcher
came up with 400 sample. However, it is advisable to have a minimum of 100 sample
in each major group or sub-group in the sample and minimum of 50 elements for each
minor group (Sudman 1976). Krish (1965) opined that skewed distribution could
result in serious deviations from normality even for moderate size sample. In such
cases a larger sample is required.

n =  (Equation No.1)

where, n = the sample size

N = Population size

e = error of 5 per cent of point.

Sample size determination also required to be made on the basis of the

statistical tools used for analysis. A good size sample- say 200-500- is required for
multiple regression, log linear, ANOVA which may be used for the rigorous impact
analysis. There is another approach - using a sample size of similar study- which
results into repeated errors. Researchers also suggest to use Published tables which

56
provide given set of criteria. However, the numbers mentioned in the table are the
number of responses received and not the number of mails served. Many researchers
normally add 10% to 30% to the sample size to compensate the non-response (Glenn
D 1992). Thus, with a view to compensate the non-response error, to have a minimum
of five elements in each sub-class, and to have more precision, the sample size was
initially increased to 1110 assessees.

The number of tax payers included in the population varies in each sub-
groups. Each sub-group has the different size of the population in each group.
Assessees are classified basically as Individual, HUF, Firm (including LLPs),
Company, Trust, and Others. These different persons are of different size of the total
population. The researcher, therefore, resorted to Proportionate stratified random
sampling method of sample selection.

Proportionate sampling is a sampling strategy used when the population is

composed of several subgroups that are vastly different in number. The number of
respondents from each subgroup is determined by their proportionate number to the
entire population. Under proportionate stratified sampling, the size of each stratum in
the sample is proportionate to the size of the stratum in the population. The following
formula was used to calculate the size of the sample in each stratum.

  ℎ 
 
Sample size =  _____________________________  × 

 


Applying the above formula, the following sample size was obtained as shown
in table 3.2.

Table No 3.2: Sample Size Under Proportionate Random Method

Status/ Jurisdiction Individual HUF Firm Company Trust Others Total

BENGALURU 811 17 26 17 1 2 875

PCIT-MYSORE 72 2 2 0 0 1 77
PCIT-HUBLI 75 1 3 0 0 1 80
PCIT-PANAJI 71 1 3 2 1 0 78
TOTAL 1029 21 34 19 2 4 1110

57
Sample size calculation under proportionate method for Individual, Bengaluru
jurisdiction:
!"#$#$%
= !&'(("( ) !!!* = 811

Similarly, calculation was made for the remaining categories.

The calculation of the sample (Table no 3.2) showed that the sample for few
sub classes were very small. In order to avoid the bias, the sample size in each stratum
have been worked out separately by giving equal weight to each strata as shown in
table no. 3.3. Therefore, the researcher, ended up with the dis-proportionate random
sampling method for the study and overall sample size was determined at 1124
numbers.

Table 3.3: Final Sample size of different stratum

JURISDICTION IND HUF FIRM COMPANY TRUST OTHERS TOTAL

BENGALURU 250 6 10 5 5 5 281
MYSORE 250 6 10 5 5 5 281
HUBLI 250 6 10 5 5 5 281
PANAJI 250 6 10 5 5 5 281
TOTAL 1000 24 40 20 20 20 1124

To collect the opinion, questionnaires were administered to 1124 Income tax

assessees. The questionnaires were collected from the respondents during the month
of July 2016 to November 2016. Since the questionnaires from the company assessees
were not received through mails, managers/CEOs/ secretaries of the sample
companies were personally met and requested to fill the questionnaires, and the filled
in questionnaires were collected. The total number of questionnaires from individual
assessees were reduced to 240, totaling in all 271 questionnaires from all types of
persons (as per Income Tax Act) per jurisdiction after removing the incomplete
questionnaires and making the questionnaire equal for each location. The shortage of
filled in complete questionnaire in each Jurisdiction has been adjusted from
questionnaires from pilot testing.

Finally, 1084 usable questionnaires were considered for analysis. Similarly,

the questionnaires from income tax authorities were collected by personal visit and
only 120 usable questionnaires were considered.

58
3.10.2 Sample Size of Income Tax Authorities

The present study adopted three stage random sampling method. In the first
stage four jurisdictions were selected, where sample of assessees were drawn. In the
second stage three ranges were chosen from each jurisdiction. In the third stage, ten
authorities were chosen for administering the questionnaire.

From each range, 10 authorities were selected as sample totaling in all 120
sample. With a view to have precision and to compensate non response error, 50 more
sample from Bengaluru Administration (HQ) were collected. Overall sample size was
170 which was 10 per cent of the total working strength of the authorities. As on 31-
3-2016 the working strength of Income Tax Authorities was 1722 as against the
sanctioned strength of 3325 excluding executive assistants and other office staff.
Further, necessary care was taken to ensure the probability of the sample in the
category of Assessees and Authorities.

3.11 SOURCES OF DATA

3.11.1 Secondary Data

Data for the study include both secondary and primary source. The secondary
sources include Reports of the various committees and commissions, Indian
Economic Surveys, Income Tax Act 1961, Income Tax Rules 1962, various circulars
and notifications of CBDT, Reports of Comptroller and Auditor General of India on
various issues of Direct Tax Revenue, Finance Acts of various years, Explanatory
Memorandum on the Budget of the Central Government, Answers to the questions in
both the houses of the Parliament, IMF working papers, NIPFP Working papers,
Journals and periodicals- Economic and political weekly, Yojana, Income Tax
Department, Ministry of Finance, Comptroller and Auditor General of India, Ministry
of Statistics and OECD. Some of the data pertaining to the states in respect of the
number of Assessees and TDS details were obtained through RTI application.

3.11.2 Primary Data

The primary data was collected from both Income Tax Assessees and Income
Tax Authorities. Two separate sets of questionnaires were prepared for the collection
of primary data.

59
3.12 QUESTIONNAIRE DESIGN

The questionnaire includes various statements designed on the basis of the

conceptual framework and the review of literature. Further, Interactions with Tax
professionals, Tax Advocates, Tax Experts, Researchers2 in the field of taxation was
also very useful in shaping the questionnaire and constructing it systematically.
Besides, discussion with the Tax administrators, Income Tax Assessees, Tax
Deductors, Teachers of Taxations, and observations of the researcher during the
interactions with Chartered Accountants and the clients also helped in designing the
statements in the questionnaire. Few statements from the early studies3 on Income
Tax system were found relevant, and adopted in a modified version for the present
study.

3.13 PILOT TESTING

After the questionnaire was preliminarily drafted, 30 questionnaires were

served to the Taxation Experts, Chartered Accountants and Tax Administrators in
Bengaluru and expert statisticians for pre-testing purpose. The response rate was 90
percent and few changes were made to meet the content validity and reliability as per
the suggestions of the experts. Finally, an improved version of the questionnaires of
both the sets were designed. The final questionnaires are mentioned in the
ANNEXURES.

Statements in the questionnaire have been designed to measure the perception

of Assessees and authorities. It includes both open ended and closed ended questions.
Further, it also includes both dichotomous and scale measurement statements. Five
point Likert’s scale has been used, ranging from Strongly Agree to Strongly Disagree
measuring at 5 to1 rank, respectively.

Questionnaires mailed to the Tax payers whose list and contact details
obtained, confidentially, and contacted with the help of Chartered Accountants and
Tax Consultants of the respective jurisdiction. Sample Selected by applying random
method and mailed through Post after contacting over the telephone and through
emails. Tax payers with in the reachable locations were contacted directly and
administered the questionnaire. Questionnaires to the Income Tax Authorities

2
Discussions held with Dr. Kavitha Rao of NIPFP to help framing the questionnaire statements
3
Few statements from the study conducted by Dr. Rani. Vaneeta, (2010) from her Ph.D. thesis were
used with alteration.

60
administered directly with the prior permission obtained from the Head Quarter
Bengaluru. After filtering the incomplete questionnaires, only 1084 useable
questionnaires were finalized for analysis.

3.14 PERIOD OF THE STUDY

Major reforms took place in Indian Income Tax system after 1990 (Rao. M.G
& R. Kavitha Rao, 2006)4. Two important committees- one headed by Dr. Raja J.
Chelliah and the second headed by Dr. Vijay L. Kelkar –have recommended various
reform measures. The effect of implementation of First generation reforms of 1992
and the Second generation reforms from 2002 onwards in rationalizing tax structure,
widening tax base, increasing the revenue and improving the administration needs to
be studied. Considering the reforms after 2000-01, the period of study selected was
from 2000-01 to 2015-16. The secondary data for the research was collected for the
period 2000-01 to 2015-16. Secondary data from different sources was compiled
according to the requirement of the study.

3.15 STATISTICAL TOOLS FOR DATA ANALYSIS

For the purpose of data analysis, relevant variables were identified on the basis
of research objectives. These variables were used as indicators to fulfill the objectives
of the study. The variables used in the data analysis were of both secondary and
primary source. Variables from the secondary data have been compiled and presented
in the fifth and sixth chapters according to the objectives set.

Various tools have been used for secondary data and primary data separately.
Tools such as Percentages, Simple Growth Rate, Exponential Growth Rate, Averages,
Buoyancy Coefficient were used for secondary data analysis.

3.15.1 Inferential Statistics

Primary data was analyzed by using Descriptive statistics including Simple

Frequencies, Mean, Standard Deviation, Variance, Chi-Square Test, Kendall’s
Coefficient of concordance, Factor analysis, and ANOVA. Primary data was analyzed
by using SPSS version 20. Further, data presented in pictorial form wherever
necessary.

4
The wave of tax reforms that began in the mid-1980s and accelerated in the 1990s (Rao. M.G & R.
Kavitha Rao. 2006)

61
3.15.2 Simple Growth Rate (SGR)

Simple Growth Rate is the ratio of increase in the given value over the value
in the previous year. Simple growth rate can be calculated by using the formula:
/% 0/!
SGR = . 1 × 100 .................................................. (Equation No.2)
/!

where, SGR =Simple Growth Rate; V1= value in the previous year; V2= Value in the
Current year. SGR has been used in the fourth chapter - the study of growth of
Income Tax revenue.

3.15.3 Exponential Growth Rate`(EGR)

Exponential Growth rate is calculated to know the rate of growth in the value
of any variable which is proportional to the value of all the years in a given set of
case. The following equation was used in the present study:

Y = ab7 .................................................................... (Equation No. 3)

b = (1 + r) …..for the case of growth and, b = (1- r) …..for the cases of decay

Where

Ye = calculated value of the given variables,

a = Initial value before computing the value
r = rate of growth or rate of decay
x = number of times intervals that have passed for the linear equation,

when we take the logarithm of both sides of equations we get,

Log (y) = Log (a) + x Log (b)

Tnis the given semi-logarithm equations a and b values are to be estimated.

3.15.4 Buoyancy Coefficient

Buoyancy Coefficient measures the efficiency in collection of tax revenue in
response to the Country’s GDP growth. The response of tax revenues to the changes
in the GDP is measured by tax buoyancy and elasticity. Specifically, buoyancy
measures past revenue growth or the combined impact of a reform measures. Tax
Buoyancy Coefficient is computed by dividing the percentage change in Tax revenue
by the percentage change in GDP over the years.

62
 The researcher used the following formula to calculate Buoyancy coefficient
of Tax Revenue.
%∆:;
%∆<
Buoyancy Coefficient = ....................................... (Equation No.4)
>?@ 0>?A
%∆= = . 1−1
>?A
<@ 0DA
%∆C = . DA
1−1

Where,

TR1 = Total Tax Revenue of the current year

TR0 = Total Tax Revenue of the Previous year
Y1 = Net GDP of the current year
Y2 = Net GDP of the Previous year
%∆= = Percentage change in Total Tax revenue
%∆C = Percentage change in Net GDP

3.16 CHAPTER SCHEME

The organization of the study is outlined as below:

Chapter One: Introduction

This introductory chapter includes discussion of the scheme of income

taxation, organization structure of Income Tax Department, a brief profile of
Karnataka state, staff strength in the department of Income Tax.

Chapter Two: Review of Literature

This chapter includes review of related literature and reports of various

committees appointed by the government to study and recommend income tax
reforms.

Chapter Three: Research Methodology

This chapter explains Research methodology used in the present study. This
chapter also explains the statement of the problem, objectives of the study need of the
study, significance, and scope of the present study. This chapter include sample and
sampling design, types of data, methods of data collection, tools of analysis. and
limitations of the study.

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Chapter Four: An Overview of Income Tax Policy and Administration

This chapter examines the policy changes made by the government from 2001
to 2015, Reforms initiated in Income tax policy, structural and administrative reforms
in Income tax, Income tax administration process, Global practice in Income Tax
administration. This chapter reviews the recommendation made by various
committees in the last two decades.

Chapter Five: Growth of Income Tax Revenue

This chapter entitled ‘growth of income tax revenue’ highlights the growth in
income tax revenue during the period of study

Chapter Six: Performance Appraisal of Income Tax Administration

This chapter entitled ‘performance evaluation of Income tax administration’

evaluates the performance in terms of tax collection, cost of collection, TDS modes of
personal income tax, disposal of assessments, tax recovery, arrears of tax, refund
claims outstanding, penalties, appeals, prosecution, mistakes and their impact on tax
revenue, tax payer services and widening the tax base.

Chapter Seven: Perception of Income Tax Assessees and Income Tax Authorities

This chapter entitled Income tax Assessees and Authorities presents the profile
of the respondents and examines their perception towards reforms in tax system and
tax administration in India during the period under study.

Chapter Eight: Summary of Findings, Conclusion, and Suggestion

Entitled ‘summary, conclusion, and suggestion highlights the major findings

of the study and some suggestions to improve tax collection and Tax administration.

3.17 CONCLUSION

Under this chapter, after finding the research gap that helped to identify the
statement of the problem, Research questions were framed to set the objectives of the
study. This chapter also included the need and the significance of the study,
operational definitions of important terms. This chapter articulated the research design
that includes the sampling method, sampling size, method and the source of data,
questionnaire design and pilot study, and the statistical tools and techniques-both
inferential statistics such as Factor analysis, ANOVA, Kruskal-Wallis test, Kendall’s

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Coefficient of Concordance, Chi-square test and a brief description of Simple Growth
Rate, Exponential Growth Rate, and Buoyancy Coefficient. At the end Chaptalization
of the study has been shown.

REFERENCES

Bird R.M. (1993). “Tax Reforms in India”, Economic and Political weekly, Vol. XXVIII, No.
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Goel G.B. (1997). “Cooperative Research: Identification of Priority Gaps”, Indian
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Krish, Leslie. (1965). Survey Sampling. New York: John Wiley and Sons, Inc. p. 627-635
Miaoulis, George, and R. D. Michener. (1976). An Introduction to Sampling.Dubuque, Iowa:
Kendall/Hunt Publishing Company, 1976.
Rao, M.G. and Rao, Kavita. (2009). “Direct Taxes Code: Need for Greater Reflection”,
Economic and Political Weekly, Vol. 44, No. 37, September 2009, pp. 35-38.
Sudman, Seymour. (1976). Applied Sampling. New York: Academic Press.
Yamane, Taro. (1967). Statistics, An Introductory Analysis, 2nd Ed., New York: Harper and
Row.

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