Corporate Tax Incidence in India

Levy Economics Institute Working Papers No. 898

35 Pages Posted: 12 Jan 2018

See all articles by Samiksha Agarwal

Samiksha Agarwal

National Institute of Public Finance and Policy

Lekha Chakraborty

Bard College - The Levy Economics Institute; National Institute of Public Finance and Policy

Date Written: November 12, 2018

Abstract

The paper attempts to measure the incidence of corporate income tax in India under a general equilibrium setting. Using seemingly uncorrelated regression coefficients and dynamic panel estimates, we tried to analyze both the relative burden of corporate tax borne by capital and labor and the efficiency effects of corporate income tax. The data for the study is compiled from corporate firms listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE) for the period 2000-15. Our empirical estimates suggest that in India capital bears more of the burden of corporate taxes than labor. Though it is contrary to the Harberger (1962) hypothesis that the burden of corporate tax is shifted to labor rather than capital, it confirms the existing empirical results in the context of India.

Keywords: Corporate Tax, Tax Incidence, Capital, Labor

JEL Classification: C33; H22; H25

Suggested Citation

Agarwal, Samiksha and Chakraborty, Lekha S., Corporate Tax Incidence in India (November 12, 2018). Levy Economics Institute Working Papers No. 898, Available at SSRN: https://ssrn.com/abstract=3100911 or http://dx.doi.org/10.2139/ssrn.3100911

Samiksha Agarwal

National Institute of Public Finance and Policy ( email )

18/2, Satsang Vihar Marg
New Delhi, 110067
India

Lekha S. Chakraborty (Contact Author)

Bard College - The Levy Economics Institute ( email )

New York

National Institute of Public Finance and Policy ( email )

New Delhi
India

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