Tax reforms
Topic: Taxation: Direct and Indirect Taxes, GST and Global Tax Issues · NCERT: Class 11, Ch 3 "Liberalisation, Privatisation and Globalisation: An Appraisal"
Meaning
Tax reforms are changes to the tax system that make it simpler, fairer and better at raising money. In India, reforms after 1991 aimed at a broader base (more people and activities taxed), fewer and lower rates, simpler procedures and a single national market for goods. The thinking was that moderate rates and easy rules encourage people to pay honestly. Class 11 NCERT warns that the rate cuts did not by themselves raise tax revenue.
Example
The Chelliah Tax Reforms Committee (1991-93) advised fewer and lower rates, a broader base, VAT and a service tax. Service tax came in 1994. Personal and corporate tax rates were cut through the 1990s. Indirect-tax reform ended in GST, launched on 1 July 2017.
Don't confuse with
- Tax incentives: exemptions and holidays that narrow the tax base. Reforms try to widen the base and lower rates in return.