IEcoS (Economic Services) Indian Economics Budgeting and Fiscal Policy-Tax, Expenditure, Budgetary Deficits Terms and Persons (Page 32 of 36)

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Tax Evasion

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Tax evasion is unlawful and is the result of illegality, suppression, misrepresentation and fraud. Here, the tax payer is not paying taxes by taking illegal measures.

Tax Expenditure/Expenditure Forgone

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Tax expenditure are concessions and exemptions provided to the tax payers by the government. These concessions are aimed to promote certain type of activities like R&D, public welfare etc. Hence, though these are exemptions from paying taxes they are indirectly some sort of expenditure (to the tune of the tax concessions made to the tax payer) made by the government to realize the given objective. Hence the tax concessions and deductions are termed as tax expenditure. (These expenditure are described as tax preferences as well) .

Tax expenditures are also termed as revenue foregone.

The tax policy in India gives rise to a number of tax preferences and they are indirect subsidy to preferred tax payers. Such implicit subsidy payments are also referred to as ‘tax expenditures’ . The logic for such a name is because of the argument that these implicit payments should appear as expenditure items in the Budget.

Tax GDP Ratio

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Indicate the tax revenues of the government as a percentage of GDP. At present, the tax GDP ratio of the centre is around 12% of GDP and the tax revenues of general government (centre and states combined) is around 16% of GDP. Higher tax-GDP ratio indicates higher tax revenues for the government. Several measures were taken by the centre and states to increase the tax GDP ratio.