A rather puzzling data was published by the Indian Income tax department this month which is as follows. Gross Direct Tax Collections reached 8.36 lakh crores, which in percentage terms, was an increase of 30% year on year. But what followed was equally baffling than the tax collection data. According to them refunds made by the Income Tax Department to the income tax payers had reached 1.35 lakh crores, in percentage terms, an increase of whopping 468% year on year. So they collect money from tax payers say few months earlier and then refund back the same money to the tax payers, then go paint the town red so as to show that refunds have become so quick and seamless. Now here is the all important question, why collect tax in the first place, if it has to be refunded? Does it not amount to unnecessary duplication of effort and dent the productivity of the nation?
Agreed most tax payers go by their income tax consultants and pay more than needed (such as TDS) for fear of questioning, knowing that the excess tax paid will be in any case refunded. But why is the country incurring such huge costs of collecting and then refunding, in the process wasting countless man hours from the income tax payer side and the government side. This is another reason why income tax should be actually abolished from India, because in doing so, it could save time and free the citizens so they can earn joyfully. Government already collects so many taxes in some form or another and that can eventually compensate the income tax shortfall. One way the government collects taxes these days is in the form of the ever increasing goods and services tax (GST). While more and more transactions come under this ambit, it is natural that GST will eventually end up as the main source of income for the government.
For Goans to understand, let’s play a likely scenario an individual tax payer is likely to go through. Imagine you spend your day of rest Sunday to compile all the income you have earned for the previous year and because you are smart enough to file them yourself, you complete it by afternoon. Now you have not prepared food for the day since you kept your spouse busy too with mundane paper work as you’ll filed the returns jointly. You decide you will order food from Zomato. While you order it through the app you notice the government is charging some tax in a transaction that only involved the restaurant, the delivery service company and yourself. Anyway you go ahead and order since the family is all noisy due to the growing hunger pangs.
Finally you and your family enjoy the meal, and because you feel some sense of achievement of filing income tax returns in the morning session you decide to go to the movies, you go online and book your show only to find out that again the government has charged some tax on a transaction between you, the movie producer and the multiplex owner. After the movie the family decides to go for impromptu shopping, there you pay for some goods and realise with that you paid some taxes there too. The point is you are paying the government their cut, in the form of taxes for each and every aspect of your life.
Since morning you have ended up paying tax on your income, your lunch, your entertainment and shopping and we are not even talking of dinner yet. Many might argue that abolishing income tax is not possible because its major role is to bring equality in income and wealth and government needs to spend on infrastructure. Well, equality in income and wealth has just remained a definition in the textbooks, while government spends on infrastructure are not even in your control.
Politicians are not the real problem here; you might still be able to convince them to abolish income tax but will receive strong resistance from the bureaucracy for fear that they become redundant the day taxes are abolished. Actually technology has been introduced in many government functions but has never translated to bureaucrats being retrenched. They usually find ways to complicate processes further to remain relevant. So we pay for technology and also the staff that the technology was supposed to replace. In the bargain Indians have been taxed left right and centre and no denying that we have not made progress, but when you see the rupee above 80 to the dollar, our infrastructure not keeping pace with the rains, it should make people wonder if our tax rupees are put to good use and we are not even talking of corruption here.
So the next time Indians go on social media to encourage fellow citizens to file their tax returns on time, please also teach your followers on how to track your tax rupees. Your social media handle will make more sense when you encourage people to file their tax returns and at the same time teach them to keep a watch on government expenses and their priorities.
Goans trying to figure out why they cannot balance their budgets will have to put extra effort to keep an eye on the amount of tax they pay indirectly. Add that to the direct income tax you pay and you get the total amount you pay to the government. Sounds tedious, well the bureaucrats have designed it that way, they don’t want you to know that you the citizen is paying their salaries and their lavish perks. History will not be so kind to our generation for we paid our taxes direct and indirect and never kept a watch on where the money was spent. Meantime, taxing times for Goans are not going away soon because we are funding heavy duty government machinery whose job is to make life miserable with or without technology.
(The author is a business consultant)
