India's Tax-to-GDP Ratio Surpasses Malaysia, Hong Kong; Reaches 19.6%

• India's combined tax collection (central and state) has reached 19.6% of GDP, as per a Bank of Baroda report.
• This ratio is higher than countries like Hong Kong, Malaysia, and Indonesia, indicating reduced tax evasion and formalization of the economy.
• The 'Income Tax Act 2025', effective April 1, 2026, aims to simplify the tax system, introduce a 'Tax Year', and enhance transparency through digitization.
• Improved corporate profits and rising per capita income have boosted corporate and individual income tax collections.
• Despite surpassing emerging economies, India's ratio is still behind developed nations like Germany (38%) and USA (25.6%), presenting future growth opportunities.

Why It Matters: India's Tax-to-GDP ratio hit 19.6%, surpassing peers and signaling economic formalization and growth potential.