Wednesday, January 19, 2017

125 cr population; Only 3% Income Tax payers

11 Jan, 2017, 03:39AM IST

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Paul Pereira
It is disgusting to know that as on date only 3% out of the 125 crores Indian population pay income tax. Who is to be blamed for such an abnormal situation?
Since independence, several central governments have lacked political will to take head on with the corrupt, high and mighty. India is still considered a third world and/or developing country by the developed countries for reasons such as poverty, corruption, inadequate infrastructure and financial mismanagement. Why are we accustomed to our fate and never trying to come out of the ‘third world’ label?
One reason for lack of quality infrastructure development and human development index can be due to lack of funds. We have to borrow funds from Asian Development Bank, World Bank and IMF to keep our country’s economy moving. We have to take loans with these lenders at very high interest rates and with a lot of conditions. Who have put us in such a terrible situation since attaining independence?.
India is cash-based economy and many small and medium scale enterprises tend to deal only with cash transactions. We tend to assume that these people don’t have huge income and automatically ignore to verify their wealth. How come vegetable sellers, fruit sellers, flower sellers, fish sellers etc are able to purchase expensive cars and build big houses? Some of these entrepreneurs have a feeling that their taxes are limited to an extent of paying only municipal and / or panchayat taxes. The I-T department should go after tax evaders who for whatever reasons try to only deal with cash. 
The government should introduce inheritance or succession tax as it is a practice in some developed countries to generate more revenue. All safe lockers in banks should be allowed to keep only legitimate permissible assets and documents. The government must make mandatory for all bank customers while making cash deposits beyond Rs 10,000 in their saving accounts the source of such income to be declared in writing or provide valid acceptable documents.
The government need not worry of winning or losing due to such good economics measures which is beneficial for the country. Only with drastic reforms the government can succeed in getting more people into the tax net and the present efforts are likely to be going in that direction.