Budget,2013 should raise income-tax exemption limit from Rs.2,00,000 to Rs.5,00,000 and restructure various tax slabs. This would be a win-win proposition for everyone-Government, taxpayers and industry for the following reasons
(1)As per March 2012 report(49th report) of the Parliamentary Standing Committee on Finance, those with annual income upto Rs.5Lakhs constitute some 89% of taxpayers but contribute only 10% of tax revenues collected.
(2)This means high cost of collection-disproportionate effort compared to revenues collected. Clear case for raising annual threshold exemption limit from present Rs.2,00,000 to Rs.5,00,000.
(3)Those with Annual Incomes Rs.5 L to 10L are 5.6% of taxpayers and contribute to 14.8% of tax revenues-Tax slab of Rs 5L to 10L at 10%. Currently 10% tax slab is applicable for incomes of Rs 2L to Rs.5L
(4)Tax for slab 10L to 20L be 20%. Currently 20% slab is Rs.5L to Rs.10L
(5)The 30% tax rate should kick in for incomes exceeding Rs.20L. Currently incomes exceeding Rs.10L taxed at 30%
The above restructuring of tax slabs will:
(1)As per March 2012 report(49th report) of the Parliamentary Standing Committee on Finance, those with annual income upto Rs.5Lakhs constitute some 89% of taxpayers but contribute only 10% of tax revenues collected.
(2)This means high cost of collection-disproportionate effort compared to revenues collected. Clear case for raising annual threshold exemption limit from present Rs.2,00,000 to Rs.5,00,000.
(3)Those with Annual Incomes Rs.5 L to 10L are 5.6% of taxpayers and contribute to 14.8% of tax revenues-Tax slab of Rs 5L to 10L at 10%. Currently 10% tax slab is applicable for incomes of Rs 2L to Rs.5L
(4)Tax for slab 10L to 20L be 20%. Currently 20% slab is Rs.5L to Rs.10L
(5)The 30% tax rate should kick in for incomes exceeding Rs.20L. Currently incomes exceeding Rs.10L taxed at 30%
The above restructuring of tax slabs will:
- incentivise hardwork and enterprise
- incentivise more investments
- increase voluntary compliance
- reduce evasion and avoidance
- reduce cost of collection and administrative work for Government
Why can't Government understand this????? It needs to improve its analytical abilities.. no doubt.
ReplyDelete@Ankush Mehta The sad part is leave alone analysing or improving analytical abilities, Government is not even implementing report of Parliamentary Standing Committee which is represented by broad political consensus. All the analysis has already been done by MPs after taking inputs from Government officials, citizen groups etc. Government is not willing to take a decision.
Delete