Challenges of Value Added Tax Compliance for Economic Growth of Madhya Pradesh, India

Abstract

Taxes is one major source of government revenue, across the globe, however, every national government have not been able to effectively exploit this great opportunity of revenue generation. It is because of number reasons including the system of taxation; tax legislation; tax administration and policy issues; over reliance on other sources of revenue such as foreign aid and grants.  Many instances corrupt practices in the system affect taxation especially as it relates to the system of tax collection and behaviour of citizens towards tax payment; and ease of tax payment. This paper examined the effect of Tax compliance on economic growth and development in state of Madhya Pradesh. Various reasons for non-compliance of tax are discussed with reference to Value added tax to find out shortcomings in the tax structure. It is aimed to characterize and explain the pattern of tax non-compliance in order to find out ways to improve it for economic growth of the State.