The challenge of catching elusive taxpayers

News Today 21-08-2020

The Prime Minister introduced tax changes aimed at rendering the scheme faceless, painless and seamless. India’s tax collection is expected to decline dramatically this year owing to the fall in national income and the reduction in jobs as a consequence of COVID-19. Thus, the fiscal deficit is likely to increase unless another spending is slashed. Around the same moment, spending correlated with the pandemic is ballooning. Yet there are dedicated expenditures that can not be curtailed, and the fiscal gap is expected to rise to a new level for 2020-21. Then there’s no alternative but to continue to raise more revenue. When tax evaders could be taken into the net of income tax and paying their taxes fairly, income tax to GDP level alone would have been about 18 per cent at existing tax levels. In a nation of more than 1,35 billion, 15 million individuals pay income tax. The policy has worked badly to counter the major black economy. One measure of that is the fact that the direct tax to GDP ratio stagnates at around 5.5 per cent in percentage terms. Several taxes are simply not taken out of white wealth and zero out of black employment.

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