I know that Delhi, Maharashtra and Karnataka account for much of Indiaโs income tax collections. But, the fact that Delhiโs direct tax to GDP ratio is as much as 21%, while for Bihar itโs 0.9% - That is staggering! ๐คฏ๐คฏ Came across this fantastic Hindu Businessline report, which analysed the direct tax contribution to GDP for 15 states and UTs. And what I learned left me nuts! .. So, Delhiโs direct tax to GDP stands out as the highest at 21.2%. -> And at the second and third spot at Maharashtra and Karnataka at 16.6% and 9.3% respectively -> Now, if you notice, the gap between Maharashtra and Karnataka is humongous, indicating how much of the stateโs GDP/economy is led by activities where people donโt earn enough, or earn whatโs non-taxable But, whatโs strange is how this %age falls for 4th and 5th rankers, which makes Karnatakaโs figures look like fantastic ๐ ๐ .. Let me explain. At the fourth spot, we have Haryana, which has a direct tax-to-GDP ratio of just 4.6% - Half of Karnatakaโs! Then you have Tamil Nadu at 4.5% and Gujarat at just 3.9%. And this should explain why we lag behind as a country. .. The best and biggest of our state economies, like TN and Gujarat, also have a majority of people employed in activities which donโt earn them much. While getting people jobs is a big problem that these states have solved masterfully, ensuring an income that reduces the income tax burden on a select few Indians is something that continues to persist. And well, thatโs something that must be a national priority. .. Why do I say that? Look at other states - You have West Bengal at 3.6%, Telangana at 2.7%, Kerala at 2.3%, Rajasthan at 2.2%, and UP at 1.7%. And then you have Bihar at a pathetic 0.9%! ๐ ๐ Need I say more? ..
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