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      Question

      Which correctly explains the primary reason India’s

      tax-to-GDP ratio and total tax collection have been on an improving trend in recent years?
      A India increased its peak income tax rate from 30% to 42.74% (including surcharges), directly raising revenue Correct Answer Incorrect Answer
      B Formalisation of the economy through GST, digital payments, improved TDS compliance, and faceless assessments, combined with nominal GDP growth buoyancy, have together raised tax collection Correct Answer Incorrect Answer
      C Removal of corporate tax exemptions caused a one-time surge that permanently raised the tax base Correct Answer Incorrect Answer
      D Increased borrowing by the government is classified under tax receipts in the Union Budget Correct Answer Incorrect Answer

      Solution

      Option (A) is wrong — corporate tax was actually CUT from 30% to 22% in 2019, yet collections rose. Option (D) is a budget classification error — borrowings are capital receipts, not tax receipts.

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