The Predictive Grey Forecasting Approach for Measuring Tax Collection

Pitresh Kaushik, Mohsen Brahmi (), Shubham Kakran and Pooja Kansra
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Pitresh Kaushik: Mittal School of Business, Lovely Professional University, Jalandhar 14411, Punjab, India
Mohsen Brahmi: Department of Economic Sciences, University of Sfax, Sfax 2134, Tunisia
Shubham Kakran: Doon Business School, DBS Global University, Mi-122, Selaqui, Dehradun 248011, Uttarakhand, India
Pooja Kansra: Mittal School of Business, Lovely Professional University, Jalandhar 14411, Punjab, India

JRFM, 2024, vol. 17, issue 12, 1-20

Abstract: Taxation serves as a vital lifeline for government revenue, directly contributing to national development and the welfare of its citizens. Ensuring the efficiency and effectiveness of the tax collection process is essential for maintaining a sustainable economic framework. This study investigates (a) trends and patterns of direct tax collection, (b) the cost of tax collection, (c) the proportion of direct tax in total tax collection, and (d) the tax-to-GDP ratio in India. By utilizing a novel grey forecasting model (GM (1,1)), this study attempted to predict the future trends of India’s direct tax collections, through which it aims to provide a concurrent and accurate future outlook on tax revenue, ensuring resources are optimally allocated for the country’s growth. Results revealed that direct tax collection has consistently increased in the past two decades, and the proportion of direct tax in total tax has also improved significantly. On the contrary, the cost of tax collection has decreased regularly, indicating the efficiency of tax collection. Forecasting shows that the collection from direct tax is expected to reach INR 30.67 trillion in 2029–30, constituting around 54.41% of the total tax, leaving behind collections from indirect tax at a total of INR 25.70 trillion. Such findings offer insights that could enhance revenue management strategies with policy decisions relevant to economists, government, and other stakeholders to understand trends and the efficiency of direct tax collection in India.

Keywords: direct tax; income tax; fiscal policy; grey forecasting; India; tax efficiency; economic growth; tax management (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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