With a sur charge of additional 15%, the implication of which is high earning individuals paying an effective tax of 97% of their incomes.

The Wealth tax further makes a hole further hole in their pockets. As a result, people start evading taxes.

The tax reforms of 1986-87 reduced the tax slabs from 8 to 4 and brought the marginal tax rate down from 60 to 50 percent.

The major tax reforms took place in 1991-92 and 1996-97, lowering the marginal tax rate to 35 percent.

The reforms further eliminated the Wealth tax.

The Kelkar Task force recommendations for simplification of tax structure was accepted with certain modifications by Government in 2005-06.

Tax effective rate of taxation for corporates was 45 to 65 percent.

The tax reforms of 1991-92 and 1996-97 reduced the marginal tax rates to 40% and further to 35% respectively.

The subsequent budgets have further reduced the marginal tax rates, and the tax rate currently stands at 30%, with a plan commitment to reduce it to 25% in the coming years.

Throughout the 1970s and 1980s, India had a very complex and regressive custom duty structure.

India also maintains a huge negative list of imports along with quantitative restrictions.

Things started to change post-1991 Crisis, and with liberalization and opening up of the Indian economy, the peak rates of customs duty were slashed from 300% to 30% in the successive budgets.

The peak rate was further lowered after Setting up of the WTO and reduced to 25%, 20% and 12.5% in 2003-04, 2005-06 and 2006-07 respectively.

The lower bound of current average customs duty is 10%.

To revamp India’s manufacturing, GOI decided to make fundamental changes in Excise duty structure.

As a first step, India introduced the MODVAT in 1986, which was further simplified and renamed as CENVAT in the year 2000.

The CENVAT contained the provisions of input credit, if a manufacturer purchased an input for which duty has been paid, he could avail back the duty already paid by him as input credit.

The committee recommended the imposition of ad valorem type of tax due to their high-income elasticity. The committee further recommended that excise duty and sales tax should be replaced by a single commodity tax or VAT.

The empowered committee of state finance ministers on June 2004, arrived at the broad consensus to introduce VAT from April 2005.

As a result, the sales tax was replaced by VAT.

In India, except for a few services assigned to states such as entertainment, electricity no other service is assigned either to the centre of the states.

The discrimination between goods and services when it comes to taxation violated the concept of neutrality of taxation. This is especially so when the services are more income elastic and consider to be a progressive form of taxation.

To remove the biased ness towards services, the GOI introduced the service tax in 1994-95 initially on three services- telephone services, insurance and share broking.

Since 1994-95, every year the service net has been widened.

The government has over the years increased the service tax from 10% in 2012-13 to 15% in 2017-18.

The Tax reforms committee of 1991, headed by Raja J Chelliah and Committee on Service taxation headed by M Govind Rao are all in favour of imposing the Service tax.

The same is also recommended by Vijay Kelkar committee on direct and indirect taxes.