Sunil Jain: Chidambaram scores

PERSPECTIVES

On the face of it, with an effective tax rate of 70.6 per cent, India's tax regime does look very repressive. Admittedly, the PricewaterhouseCoopers study that has done the exercise for the World Bank has used a definition which is different from that used normally, but since this has been done for each country, the net effect is neutral. Yet, when you look at the data a bit closely, India is not doing that badly. Thanks to e-filing and other such measures, the total time to pay taxes in the country is around 271 hours which is not too different from the EU or the G8 average. If you look at the individual taxes, such as those paid by corporate or individuals, India's somewhere in the middle. The problem is really in 'other' taxes where India's 32.5% is way above the rest. Around 80 per cent of this, it transpires, is the Central Sales Tax that is not vattable "" the rest is property taxes and other state levies. So, if the CST falls to zero by 2010 as planned, India's tax ranking could go up from the present 159 to around 80. 
 

NOT SO TAXING (India does well on ease of payments and not so badly on most tax rates)
	No. of hours to pay tax	Total Tax Rate (%)
		Corporate	Labour	Others	Average
Brazil	2600	21.1	40.6	7.5	69.2
Russia	448	14.0	31.8	5.7	51.4
India	271	19.6	18.4	32.5	70.6
China	872	19.9	46.0	8.0	73.9
UK	105	21.3	11.3	3.2	35.7
USA	325	27.1	9.6	9.5	46.2
Korea	290	18.3	11.4	5.2	34.9
Malaysia	166	19.1	15.6	1.4	36.0
Indonesia	266	26.6	10.6	0.1	37.3
Source: Paying Taxes 2008, World Bank/PricewaterhouseCoopers