The pre-budget days are here again and there cannot be a better time than this to once again seek an end to personal income tax.
Ending taxes on personal income will be a big relief to the senior citizens and the salaried people. There are alternatives to raise revenue and those need to be carefully explored. The government can also look at hiking indirect taxes to mop up the shortfall.
ArthaKranti Pratishthan, a Pune based NGO, which is credited with recommending demonetisation to weed out black money, has repeatedly demanded complete abolition of taxes, direct and indirect by the central or state governments and also the local bodies.
It suggested that the taxes be replaced with Bank Transaction Tax (BTT). The idea was that inward bank transaction would attract a levy and it would be a single point tax deducted at source.
This deduction is to be effected on receiving/credit accounts only. This deducted amount will be credited to different government levels like central, state and local (say 0.7%, 0.6%, 0.35% respectively). Transacting Bank will also have its share in this amount as the bank has a key role to perform (say 0.35%), said
ArthaKranti.
Assocham has recommended that tax exemption limits for senior citizens and salaried employees should be also raised substantially for a demand push to the economy.
Assocham president Sandeep Jajodia said in his presentation before finance minister Arun Jaitley that senior citizens and salaried employees are particularly affected by rising prices of essential commodities and deserve relief. This would not only give a push to the consumer demand but also promote personal savings.
He added that corporate tax should be reduced to 25% as committed by the government earlier, to encourage investment by domestic and foreign companies.
Niti Aayog too has recommended keeping tax levels moderate in order to tackle black money.
“Structural changes to reduce flows of black money will involve keeping tax levels moderate and tax administration simple and transparent, and reforms in real estate transactions, including seeding of Aadhar and moderate stamp duties,” said Niti Aayog’s
Three Year Action Agenda .
It said that the government must frontally address the problem of corruption among tax officials. Cases of corruption among tax officials must be prosecuted and disposed swiftly since without instilling honesty among officials in this area we cannot curb the generation of black money.
In 1997-98, P Chidambaram while delivering the
budget speech said: “I believe that a good tax policy should aim at moderate rates, a wider tax base, simpler procedural rules and securing greater compliance.”
The 1997-98 budget was described as a dream budget as it presented a road map for economic reforms in India and included lowering income tax rates, removal of the surcharge on corporate taxes, and reduced corporate tax rates.
To rationalize taxation in India, the government had set up a high powered committee in August 1991, under the chairmanship of Raja J. Chellaiah. The Chellaiah committee had made recommendations for a comprehensive reform of the system of central taxes.
