A tax non-compliance society...
We are happy over the emphasis made by
Finance Minister Arun Jaitley on expanding the income tax base and correspondingly correcting the very low tax-GDP ratio. Look his graphic description:
•As against estimated 4.2 crore persons engaged in organised sector employment, the number of individuals filing return for salary income are only 1.74 crore.
•As against 5.6 crore informal sector individual enterprises and firms doing small business in India, the number of returns filed by this
category is only 1.81 crore.
•Out of the 13.94 lakh companies registered in India up to 31 March 2014, 5.97 lakh companies have filed their returns for Assessment Year 2016-17. Of these, as many as 2.76 lakh companies have shown losses or zero income. 2.85 lakh companies have shown profit before tax of less than Rs 1 crore.
•Only 7781 companies have profit before tax of more than Rs 10 crore.
•Among the 3.7 crore individuals who filed the tax returns in 2015-16, 99 lakh show income below the exemption limit of Rs 2.5 lakh p.a., 1.95 crore show income between Rs 2.5 lakh and Rs 5 lakh, 52 lakh show income between Rs 5 lakh and Rs 10 lakh and only 24 lakh people show income above Rs 10 lakh.
•Of the 76 lakh individual assessees who declare income above Rs 5 lakh, 56 lakh are in the salaried class.
•The number of people showing income more than Rs 50 lakh in the entire country is only 1.72 lakh. We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold and number of Indian citizens who flew abroad, either for business or tourism, was 2 crore in 2015.
From these figures we can conclude that we are a tax non-compliant society. The predominance of cash in the economy makes it possible for people to evade their taxes. When too many people evade taxes, the burden of their share falls on those who are honest and compliant.
A wonderful data analytics!
Eradicating black money...
The NDA government has been attempting to eradicate the menace of black money. Demonetisation is among the efforts continued in this direction. Digital technology now available, would help in keeping track of the old Rs 500 and Rs 1000 notes deposited into banks. The Finance Minister referred to around 18 lakh such deposits showing unusually large amounts: “deposits of more than Rs 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs 3.31 crore. Such large deposits will be scrutinised.” The Finance Minister expressed the hope that this mine of data will help expand the tax net as well as increase the revenues.
Revenues buoyant and deficit to target
Jaitley has the reason to feel happy over fiscal performance through the current year that helped conform to the fiscal deficit targeted at 3.5 per cent of GDP. The bonanza of low crude and petroleum product prices and the prudent upward revision of excise duties on products, helped record a huge jump in excise duty collections, of around Rs 99,000 crore, over the previous year. Due to sluggish growth in manufacturing, estimate of corporation tax, customs and service tax growth has been modest but income tax revenue is estimated to grow around a healthy 25 per cent.