The fall in the ratio of customs and excise duty collection to GDP has resulted in an overall decline of tax-GDP ratio from an average of 9.32 per cent during the 8th Plan to 9.17 per cent in 2003-04, according to the CAG report for 2003-04.
The tax-GDP ratio had declined to a low of 8.15 per cent in 2001-02 and despite a recovery in 2003-04, it was still below the average of the 8th Plan, according to the report by Comptroller and Auditor General of India, presented in Parliament.
If the gross tax receipts and GDP in 1985-86 are set at 100, index of tax receipts at 888 in 2003-04 was lower than the GDP index of 997, it said.
Attributing this to a decline in ratio of customs and excise duty collection to GDP, the report said the ratio of the two taxes to GDP fell from an average of 2.92 and 3.58 per cent during the 8th Plan (1992-97) to 1.75 and 3.27 per cent in 2003-04.
Corporate and income tax collections, on the other hand, witnessed improvement relative to GDP during the period.
While corporation tax-GDP ratio increased from 1.31 per cent during the 8th Plan to 2.29 per cent in 2003-04, that of income tax rose from 1.21 per cent to 1.49 per cent.
However, income tax-GDP ratio remained stagnant at 1.49 per cent during 2002-03 and 2003-04.
During 1985-2004, the average annual rate of shift in the shares of customs duties and excise duties stood at -4.22 per cent and -2.60 per cent, while that in income tax and corporation tax was 3.02 per cent and 4.18 per cent.
This led to negative 1.29 per cent annual rate of shift in overall tax receipts to GDP during 1985-2004.