Data released by Income Tax Department showing appreciable rise in number of taxpayers and those in slabs above Rs 1 crore per annum may be better than earlier years, but is not at all realistic with just 81,344 individuals in a country of more than 135 crore. Data, like in earlier years, reveals that maximum Income Tax and Tax-Deducted-At-Source TDS comes from salaried class that too with large share from government employees. It is also noteworthy that more than half of the Income Tax collected comes from two states. Best is to replace Income Tax with Expenditure Tax so that tax may come from expenses made from both white and black money.
Income Tax Department should study models of tax-system from countries with highest honesty-index like New Zealand, Denmark and advanced countries like US where tax returns are voluntarily filed in a realistic manner. New-to-be introduced Income Tax Act to replace half-century old Act of 1961 should incorporate features so that people may pay Income Tax cheerfully and voluntarily rather than under panic of tax authorities. India should be turned gradually in a cashless country targeting bigger transactions rather than ordinary people.
Maximum cash withdrawal limit from banks for an individual should be fixed at Rs 96,000 per month to be gradually reduced to Rs 48,000 per month. All expenses above Rs 1000 may be compulsorily made through banks. All payments including part-payments above Rs 20,000 towards sale or purchase may be made compulsorily through banks. All purchases of long-lasting items in costlier versions like TV sets, refrigerators, cars may require PAN card, and be reported to Income Tax Department to match luxury expenses with disclosed income.
GST system should be drastically overhauled so that GST bills not demanded by customers may not be sold to avail Input-Tax-Credit (ITC). For this, GST rates should be 10 and 30 percent, abolishing even 0 percent slab with ITC-system applicable only for trade-purposes, abolishing it from service and manufacturing sectors and service-sector coming under 10 percent GST slab. For commodities attracting cess, additional GST slabs in multiples of 100 percent may be there. All traders in GST network may be compulsorily equipped with card-swiping machines and required to give invoice without being asked for by customers.
