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DMPQ: Tax reforms are the major part of the economic programme. Discuss the reforms taken in the direct taxes and indirect taxes in India.( Economy)

RAS/RTS Prelims and Mains Exam Preparation

Since the beginnings of the last decade as a part of the economic reforms programme, the taxation system in the country has been subjected to consistent and comprehensive programme.  Indian government over the years have introduced tax reforms from time to time.



Direct tax reforms:

  • Reduction and rationalisation of rates- there are only three rates of income tax
  • Simplification of procedure
  • Strengthening of administration
  • Widening of tax base to include more tax payers in the tax net
  • Exemptions are gradually being withdrawn
  • MAT was introduced for the zero tax companies
  • The Direct tax code of 2010 is meant to replace the outdated Income tax code of 1961.


On indirect taxes:

  • Reduction in peak tariff rates
  • The number of slabs has come down drastically
  • There is a progressive change from specific duty to ad valorem tax
  • VAT is introduced
  • GST is being rolled out
  • Negative list of service tax from 2012.




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