Changing Trends of Taxes and Public Debts in India

Abstract

A Review of India?s Future Tax System is under consideration for over last twelve months. Replacing the half century old Income Tax Act, the Central Government is aiming to revolutionize the existing taxation system in India, by ushering in changes in the domains of personal and corporate tax structures. The new tax code is expected to come into effect by 2011 fiscal year. The objective of this paper is to study the impact of the Direct taxes on the public debt position of the economy. The sample consists of time series data for four variables namely Direct Tax revenue, Public Debt, Gross Domestic Product at Factor Cost (GDP) and Yield on Government Securities (IRY) from 1981 to 2009. The data was collected from Indian Public Finance Statistics 2009 and Reserve Bank of India handbook of Statistics. The rationale of this paper is to absorb the trend of changing tax revenue and public debt position in India. Further the public debt and direct tax structure of the BRIC nations is also studied.