Tax-to-GDP: Numbers and optics

Takeaways from some successful countries that improved their tax collections and what it means for India

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Discussions on the tax-to-GDP ratios for India have often cited the country's performance in comparison to other nations.

The underlying analysis refers to simple comparisons to other similar countries or to statistical tools like the stochastic frontier analysis. The South Asia Development Update, 2025, of the World Bank, too, uses this approach. The tax gap from this method indicates the shortfall in revenue collection relative to a potential. The broad conclusions in the latter suggest that the tax gap for India is similar to that of Emerging Markets and Developing Economies. This approach assumes that tax collections depend primarily on the structural features of the economies.