India’s tax-to-GDP ratio reaches 19.6 per cent, structural reforms key to further gains: Report

India’s combined tax-to-GDP ratio has reached 19.6 per cent, placing the country at par with several major global economies and highlighting steady progress in tax collection efficiency, according to a report by Bank of Baroda.

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The ratio includes both central and state tax collections and is higher than that of several emerging markets such as Hong Kong, Malaysia and Indonesia.

The report noted that while India’s central gross tax revenue stands lower at 11.7 per cent of GDP, the overall integrated figure reflects stronger participation by states and better compliance across the system.

However, India still trails advanced economies such as Germany, which has a tax-to-GDP ratio of around 38 per cent, and the United States, where the ratio is about 25.6 per cent.