Tax revamp: Incentives vs broader base amid revenue stability concerns

At the aggregate, the ratio of revenue foregone to total revenue collected has declined for corporate tax, especially in the last three years for which data is available

The reform agenda in taxation — both for income taxes and indirect taxes — has advocated for a broad-based regime with low tax rates. Through this reform process, the income tax structure in India witnessed a significant reduction in the number of slabs, stabilising at three by the late 1990s. Another critical element of this agenda was to reduce the extent of incentives built into the regime. The introduction of sunset clauses for some major incentive regimes was a step in this direction. More recently, the government has attempted another push in this direction by offering a lower rate regime