Strategic Imperatives of Tax Reforms in India: Evolution and Challenges

Tax policy has evolved in the country in response to changing development strategy over the years. In the initial years, the tax policy was guided by a large number of demands placed on the government. These demands by taxpayers have been summarized into the need to increase the level of savings and investment in the economy to stimulate growth and the need to ensure a fair distribution of incomes. These meant an effort to raise taxes from those with an “ability to pay”, with little regard for the effective measures for the chosen instruments.