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flag India’s tax-to-GDP ratio hit 19.6% in 2026, matching major economies, due to reforms and strong tax growth linked to economic expansion.

flag India's tax-to-GDP ratio reached 19.6% in 2026, matching several major economies, according to a Bank of Baroda report. flag The improvement, driven by structural reforms like tax simplification, digitization, and the upcoming Income Tax Act 2025, has strengthened alignment between tax collections and economic growth. flag Tax elasticity hit 1.1, above the long-term average, with strong links to nominal GDP and per capita income. flag While surpassing emerging markets, India’s ratio still lags behind advanced economies like the U.S. and Germany. flag Statistical analysis shows a bidirectional relationship between taxes and GDP, but no long-term cointegration, highlighting that sustained revenue growth depends on reforms, not just economic expansion.

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