Tax-to-GDP ratio
- How often
- Every yearUnion Budget, 1 February
- Next release
- Mon 1 FebIn 81 days · expected · 11:00 AM
2026-27, down from 11.4% in 2025-26.
Events on this chart
Source: Union Budget, released 1 Feb 2026 · Chart: Clarity UPSC
- Previous
- 11.4%2025-26
- Highest
- 11.5%2021-22
- Lowest
- 10.0%2019-20
10 readings since 2017-18.
Story
How much tax the Centre collects for every ₹100 of Gross Domestic Product (GDP).
What is happening now As of 2026-27
The Union Budget 2026-27 expects the Centre's gross tax revenue to be ₹44.04 lakh crore, 11.2% of Gross Domestic Product (GDP). The ratio was 11.5% in 2024-25 and 11.4% in 2025-26 (revised estimate). The Budget expects tax revenue to grow 8.0% over 2025-26, more slowly than the 10.0% growth it assumes for GDP at current prices, so the ratio slips.
Direct taxes on incomes and company profits, ₹26.97 lakh crore, make up 61.2% of the total and 6.9% of GDP. Indirect taxes, ₹17.07 lakh crore, come to 4.3% of GDP, down from 4.6%. The Centre's Goods and Services Tax (GST) receipts are budgeted slightly lower, because the compensation cess, ₹88,000 crore in 2025-26 (revised estimate), is nil in 2026-27. The Ministry of Finance says the move to two main GST rates, 5% and 18%, made on the GST Council's recommendation, will simplify the tax and boost domestic consumption.
Why it matters
The ratio shows how much of the economy's income the Centre collects as tax. The more it collects, the more it can spend on defence, welfare, infrastructure and interest without borrowing. A low ratio means more of that spending has to be borrowed, which adds to debt.
The ratio also shows how tax policy and the economy interact. Tax cuts, such as lower income tax or lower Goods and Services Tax (GST) rates, leave more money with households and firms but can lower the ratio. Better compliance and more people filing returns raise it. Because 41% of the Centre's shareable taxes go to the states, the ratio matters for state budgets too.
What it is
This ratio shows how much tax the Centre raises for every ₹100 of Gross Domestic Product (GDP). It uses gross tax revenue: corporation tax, income tax, the Centre's Goods and Services Tax (GST), customs and excise duties, counted before the states receive their share.
The Union Budget reports the ratio: actuals for past years, a revised estimate for the current year and a budget estimate for the next. Only central taxes count. States' own taxes, such as State GST (SGST), are left out, so the ratio covers only part of the tax raised in India.
The ratio rises when tax revenue grows faster than nominal GDP, the size of the economy measured at current prices. In other words, tax buoyancy is above 1. Tax cuts and slowdowns pull it down. A higher ratio lets the Centre spend more without borrowing.
Read this number
- The publisher
- The Ministry of Finance presents the Union Budget to Parliament every year, usually on 1 February, with targets for spending, receipts and borrowing.
Terms on this page (3)
- GDP
- Gross Domestic Product
- GST
- Goods and Services Tax
- SGST
- State Goods and Services Tax
History
- 1 Jul 2017The Goods and Services Tax (GST) replaces service tax, most central excise duties and many state taxes.
- 2019-20Corporation tax is cut to 22% for existing companies and 15% for new manufacturing companies; the lowest rate had been 25%. The ratio falls to 10.0% of Gross Domestic Product (GDP).
- 2021-22The ratio recovers to 11.5% of GDP.
- 1 Apr 2026The Income-tax Act, 2025 replaces the Income-tax Act, 1961.
Readings
| Period | Value | Status | Released |
|---|---|---|---|
| 2026-27 | 11.2% | Budget estimate | 1 Feb 2026 |
| 2025-26 | 11.4% | Revised | 1 Feb 2026 |
| 2024-25 | 11.5% | Final | 1 Feb 2026 |
| 2023-24 | 11.5% | Final | 1 Feb 2026 |
| 2022-23 | 11.4% | Final | 1 Feb 2026 |
| 2021-22 | 11.5% | Final | 1 Feb 2026 |
| 2020-21 | 10.2% | Final | 1 Feb 2026 |
| 2019-20 | 10.0% | Final | 1 Feb 2026 |
| 2018-19 | 11.0% | Final | 1 Feb 2026 |
| 2017-18 | 11.2% | Final | 1 Feb 2026 |
For UPSC
Know the difference between gross tax revenue and the Centre's net tax after the states' share (41%, as recommended by the 16th Finance Commission), the split between direct and indirect taxes, and tax buoyancy. The Centre's ratio leaves out the states' own taxes.