In this very fashion, the Centre just after Bihar elections has increased service-tax by half-percent in name of cess for ‘Clean India’ after it was heavily increased by two-percent in last general budget making lives of people costlier. At the same time, central government in a much-delayed step has announced abolition of LPG-subsidy for affording people increasing excise on petrol and diesel simultaneously.
Our basic tax-structure is excessively faulty with additives like cess, surcharges, subsidies and unwanted exemptions. Tax-structure should be simple so that applicable tax-rates may absorb all additives likes cess and surcharges. At the same time useless subsidies like on LPG for affording families and misused tax-exemptions like on Income Tax for charity, donations, contributions to political parties etc should be abolished. For extra revenue-earning, any further prices of petrol and diesel may be kept same without any cut affected due to price-reduction of crude by increase in excise-duty. Prices of commodities once increased because of increase in prices of petroleum products is never reversed by trade and industry after cut in prices of petroleum products.
Central government as such should take back imposing cess on service-tax. Required revenue may be generated by abolishing useless subsidies and tax-exemptions. Massive reforms in tax-structure should be planned for next Union budget so that rates of custom and excise duty may be by and large ad-valorum except for items like petroleum products and all these tax-rates should be inclusive of all cess and surcharges for auto-increase in tax-earning according to usual trend of price-rise. There may be fixed rates for different slabs of tax-imposition like 5, 10, 20, 30, 50 or 100 percent. Whenever tax-rate may have to be changed for a commodity, it may be put in another category rather than increasing it haphazardly.
