Thursday, May 11, 2006

Taxman to gun for affluent

Two recent articles on tax caught my attention. One was this, in Financial Express, titled "Taxman guns for affluent India" and the other was a piece in TOI that the number of Income Tax payers has fallen from 2.5 crore to 2 crore (couldnt find anything online on it though).

The solution is to widen the tax base, not try to extract more out of those already squeezed to the hilt. There are millions of businesses (you really need not look very far - your friendly neighbourhood doctor, lawyer, medical shop, grocery, hotel) that accept only cash, do not give out bills and grossly under report income. If this can help get these evaders under the tax net, I am all for such an assessment. In all probability it will catch the honest few who have reported something, like the usual punctuality dilemma.

Today the only people who pay Income tax tax in India, pretty much, are the salaried class. It is this class that subsidises every thing under the sun. It is also this class that pays the 12.24 service tax, the VAT and every new cess that is introduced. While, many businesses say, sorry for cards and accept only cash and stay out of the tax net. Get them first.

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