Goods and Services Tax (GST) collections have not played out the way it was expected and that can be one of the reasons for the increase in direct tax-GDP ratio, Sudhir Kapadia, national tax leader at Ernst & Young (EY).

"If that picks up then we should see an uptick in the overall tax to GDP ratio as well," Kapadia said, adding that connectivity between GST and direct tax systems is certainly helping.

India's direct tax to GDP ratio hit a ten year high of 6 percent in the fiscal year 2018. For this financial year, net direct tax collection in the first seven months stands at Rs 4.9 lakh crore which is almost 42 percent of the budget estimate.

"On the tax to GDP ratio, if you look at the combined tax to GDP, direct as well as indirect taxes put together, it is certainly showing an increase from a healthy 0.5 percent to 0.75 percent the last time we had looked at it. It is inching up from overall 11 percent to 12 percent," Kapadia added.

First Published:Oct 22, 2018 9:59 PM IST