The total tax revenue collected by the government as a share of the country's gross domestic product; it shows how much of the economy's output is mobilised as tax.
- It is computed as total tax revenue divided by GDP, expressed as a percentage, and can be measured for the Centre alone or for the general government (Centre plus states).
- A higher ratio means greater fiscal capacity to fund public services and investment without excessive borrowing.
- India's tax-to-GDP ratio (around the mid-to-high teens for the general government) is modest compared with many advanced economies; verify the latest figure from the Economic Survey.
- A narrow tax base, large informal sector, exemptions, and evasion keep the ratio low; widening the base and improving compliance raise it.
- It is linked to concept tax buoyancy, the direct indirect mix, and the overall fiscal position.
The definition (tax revenue as a share of GDP), the interpretation (fiscal capacity), and India's relatively low ratio are commonly tested fiscal facts (verify the latest).
A low tax-to-GDP ratio reflects a narrow base and evasion, not necessarily low tax rates; it differs from tax buoyancy (which measures responsiveness to growth, not the level).
Total tax revenue as a percentage of GDP; measures fiscal capacity; India's ratio is relatively low (verify the latest).