Continued from Part-I
I have the following suggestions for simplifying the tax structure and unburdening the population of the country which would not only broaden the tax payers base to make every citizen a partner in the progress of the nation but also facilitate improvement in tax compliance and collection besides enhancing the quantum of tax revenue manyfolds:-
I have the following suggestions for simplifying the tax structure and unburdening the population of the country which would not only broaden the tax payers base to make every citizen a partner in the progress of the nation but also facilitate improvement in tax compliance and collection besides enhancing the quantum of tax revenue manyfolds:-
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(a) Let every individual who is having income including a begger, be a tax payer, to make him feel that he is also contributing in the progress of the country and he is not the one, only to receive from the country (means the government) or his countrymen.
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(b) To identify every individual he should be given an identity card like the election identity card which should specify the address, the district, the State, the place and the date of birth. Its numbering could follow a similar pattern as that of the registration Nos being given to the vehicles, with the exception that the year of birth be also included in the number.
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(c) The tax should be payable in any of the banks, nationalised or other banks as long as they are listed with the Reserve Bank of India.
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(d) The tax could be payable any time the person wishes to do so with the bank and in any number of instalments during the year.
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(e) Payment of tax could be linked with issue of ration cards, electricity, water or telephone connections, rail, air or bus bookings, issue of passports, registration of vehicles, preparation of voters lists and so on, so that tax compliance can be ensured.
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(f) The rates of taxation should be so nominal that the amount paid should neither upset the family budget nor should any one feel the pinch in parting with this nominal amount for contribution towards the nation’s progress. The suggested rates are:-
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( i ) Upto Rs 50,000 gross annual income : 1% of the gross income
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(ii) From Rs 50,000 to Rs 1,00,000 : Rs 500 + 2%
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(iii) From Rs 1,00,000 to Rs 1,50,000 : Rs 1,500 + 3%
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(iv) From Rs 1,50,000 to Rs 2,00,000 : Rs 3,000 + 4%
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(v) From Rs 2,00,000 to Rs 2,50,000 : Rs 5,000 + 5%
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(vi) From Rs 2,50,000 to Rs 3,00,000 : Rs 7,500 + 6%
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(vii) From Rs 3,00,000 to Rs 3,50,000 : Rs 10,500 + 7%
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(viii) From Rs 3,50,000 to Rs 4,00,000 : Rs 14,000 + 8%
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(ix) From Rs 4,00,000 to Rs 4,50,000 : Rs 18,000 + 9%
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(x) From Rs 4,50,000 to Rs 5,00,000 : Rs 22,500 + 10%
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(xi) From Rs 5,00,000 to Rs 7,50,000 : Rs 27,500 + 11.5%
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(xii) From Rs 7,50,000 to Rs 10,00,000 : Rs 56,250 + 13%
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(xiii) Above Rs 10,00,000 : Rs 88,750 + 15%
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(g) The banks should submit their collection statements to the income tax department, who if they feel may carry out percentage checks to ensure compliance and achievement of collection targets. There need not be any requirement for submitting returns for incomes below Rs 50,000 and the tax for incomes above this amount should be deducted by the employers and deposited with the banks every month alongwith the individual’s income statement. Persons having sources of income other than, and in addition to salary, only need submit their returns/ supplimentary returns to the banks. All banks should eventually adopt automation and be linked with each other through computers.
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(h) Income from investments given in deposits for earning interest or dividend only, and tax on which has already been paid should be totally exempted from further tax. All other incomes including agriculture income should be taxable at the same rates as stated above.
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(j) Savings for old age, such as provident funds, all types of pensions, gratuity, insurance benefits and so on, should all be totally exempted from income tax as is already in vogue with a few exceptions.
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(k) Donations and gifts on which tax has already been paid should not be taxed again. In other words no amount should be taxed more than once. Political parties, charitable trusts, all other similar establishments or organisations and even charities paid to the government for reliefs such as floods, draught, natural calamities and so on, should be taxed at the same rates without any exceptions to avoid any possibility of manipulations,
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(l) To prevent large currency accumulation in limited hands, every year newly designed and new colours of currency notes should be produced with the year of printing boldly printed on the notes. At the end of five years the validity of currency notes should expire and the old currency notes should be sent out of circulation and be exchangeable through the banks only, before their validity period of five years ends.
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(m) Taxation laws should be so simplified that not only should every one be able to understand them easily, but also be made uniform for one and
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all without giving undue advantages to any category of persons except may be handicapped or senior citizens above sixty years of age.
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(n) To ensure proper scrutiny of tax receipts and tax compliance, suitable modalities and a system be worked out by the IT department to prevent anyone from jumping the tax net and also undue harrassment to an honest tax payer. In other words the IT department also has to play its role in an honest and peoples’ friendly manner.
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The above suggestions if found to be appealing for making the tax base wider, the tax payment and the laws simpler, tax amount so nominal, that every one willingly agrees to part with this nominal amount into the coffers of the exchequer, there should be no reason for our black economy to thrive as it is doing now. However, the Government must play its part well so that the citizens or rather the tax payers feel that their contribution is being well spent and not going into wrong hands viz the scamsters. These suggestions are just the thoughts of a loyal citizen of the country and should be disected, analysed and discussed so that some fruitful solution can be arrived at for the general benefit of the country’s population.
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The Government can give an opportunity to those who have vast sums of unaccounted black money to get rid of it by depositing the same in the banks and totally exempting them from tax as a one time measure or charging a very nominal tax so that the black money menace should end for ever and not grow again to the same proportions as it is at present. A strong hand of an honest and sincere government would be an essential ingradient for this achievement.
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by
Col LK Anand Retd
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