There is a push on the part of the Centre to raise more taxes. In principle, this is a good step as it should fetch more money to the exchequer. At the same time, Prime Minister Narendra Damodardass Modi, like all others, knows well that there are more tax evaders than taxpayers in this country. Practically speaking, the number of tax evaders across the country should be several times higher than those who dutifully pay taxes.
Today’s taxpayers are mainly those working in government and private sector establishments and small and medium entrepreneurs with known sources of income. They are the ones heavily taxed. Strangely, it is this segment that seems to be the main target of the present Central push to raise tax revenue. In other words, the dutiful and registered taxpayer will get further punished while those who are unknown continue to remain unknown to the taxman.
On the other hand, corporate biggies will continue to get government protection and keep on cheating the nation. For instance, one can cite the example of the Adani Group getting a complete waiver with a single order from the present Modi government, on the penalty imposed on it of Rs200 crore for ecological damages it caused while building its port in Gujarat.
Similarly, the escape from the clutches of tax authorities by the UB Chief Vijay Mallya to a friendly nation and the government of India not even lifting a finger for extradition shows tax evading is an acceptable act. These and many such condoning of tax evaders gives a clear message that the taxman has been instructed to hit out at the helpless and protect those that damage this country.
The Prime Minister has in his ‘Mann Ki Baat’ programme, as also in a TV interview and in his address of tax officials in New Delhi the other day, made pointed references to the matter. He also went to the extent of holding out a threat to tax-defaulters and tax evaders that the government would be going hammer and tongs at them after the present deadline for voluntary disclosures ends on September 30.
Everyone should come out with declarations on their hidden wealth (even if that be Rs10,000!) before the deadline, he has warned. The job of the Prime Minister is to govern, not to hold out threats.
At present, the revenue set up is mostly chasing the not so long list of those who are already taxpayers. Only 5.5 crore women and men, forming less than four per cent of the total population of this nation, pay taxes which amounts to as high as Rs17 lakh crore a year to the exchequer.
Clearly, by a rough estimate, as high as 20 per cent of Indians are well-heeled and should be paying tax, but the number of those who file income tax returns is put at a little over 2.6 crore; and only less than half of them pay tax.
Rhetoric is no substitute for action. The present government has been in office for the past over two years — a little less than half its term. Nothing has been done to arrest large-scale tax evasions. Even Modi’s 2014 election promise of bringing back the hefty sums of slush money supposedly stashed abroad by tax evading Indians has come a cropper, leave alone his promise of putting parts of such reclaimed money in every Indian’s bank account. Instead, the Prime Minister seems now to be after the weaklings, who struggle in their daily lives.
The real effort on the part of the government should be to catch the sharks, including government officials and large business houses who embezzle huge amounts and defraud the system systematically. India’s tax collection base should be expanded so that the net has more fish in it.
While the big fish manage to hire the best accountants and lawyers who help them cover up their profits running into thousands of crores, it is well nigh impossible for a common taxpayer to hide major income primarily because s/he cannot avail expensive tax consultancy services.
Agricultural income has provisions for tax exemption, but we have large chunks of crorepatis in the farms sector who wallow in wealth. Complaints are also that there are large numbers of smart alecs who use this clause to turn their ill-gotten business and other wealth into white money.
While this might be a tricky sector, there is no doubt that malpractices of various kind are one too many, and it is here that the government’s attention should mainly be focused.The government has already stated that it wants to double the taxpayers base to 10 crore. That effort should be taken up in right earnest.
While talking of expanding the tax net, two vital points must be remembered. First, every individual must feel that the government and society at large respects the taxpayer. Secondly, while the minimum taxation limit should be brought up to at least Rs5 lacs per annum, the taxation slab should be brought down to less than 20 per cent on total annual income. This implies that some people paying tax at present will go out of the net if the minimum taxable income becomes Rs5 lacs.
While losing out on this section, the government will be able to attract a huge number of new people who make incredible amounts of money, but clandestinely, if it offers them respectability as well as a lower tax rate. At present, the genuine taxpayer with a PAN card gets no special treatment from the establishment.
A kind of social security along with facilities in simple things of life such as train and air ticket reservation, immediate supply of FIR copy if a complainant produces proof of tax paid, separate counters and queues exclusively for people with proof of current tax payment, priority and preference in bank related transactions and such other very many inconsequential but meaningful daily troublesome activities would not only make the taxpayers’ life easy but also greatly attract the non-taxpayer to avail these privileges.
Coming to think of it, most of these privileges may not create any extra burden on the state exchequer. But the rewards would be many. These acts would create an atmosphere of positivity in the minds of the non taxpayers. And those who pay tax will be rewarded instead of getting punished.
