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15th Finance Commission Chairman NK Singh has said India's tax revenue potential is lower by 4 per cent of Gross domestic product (GDP) and the country needs to bring in deep reforms in the revenue management system. He also said an incentive mechanism for states needs to be worked out so that their policies are aligned to those of the central government.

Singh said there is a need to redo direct and indirect taxes and bring about deep reforms in the revenue system. Singh mentioned ‘at least 4 per cent of GDP is a lost potential in terms of India's revenue and if some part of it could be realised it would help greatly in aligning not only inevitable expenditure needs, pandemic needs, health needs, but find a convergence between sustainable development and medium-term fiscal policy statement.’

The 15th Finance Commission report, tabled in Parliament in February, had highlighted that the actual tax collections by the Centre during the last ten years, on average, was 4 per cent less than what was budgeted.