To earn may soon become a stigma, going by the way the policymakers intend to tax the “rich” Indians. At least this is what seems. The Government has found an answer to high inflation, widening fiscal deficit, measly investments and poor growth -- tax the rich even more!
It is no secret that only about 32 million Indians pay taxes in a country of more than 1,250 million. Tax experts point out that 63 per cent of the tax revenue comes from those who pay taxes of more than Rs 10 lakh and this population consists of less than one per cent of the total tax payers in India .
The Union Budget has imposed 10 per cent surcharge on the official number of 42,800 rich people. By asking these people to cough up more taxes, will we able to generate enough revenue to take care of the deficitsIJ More important is the fact that does India have only this many rich peopleIJ There are umpteen number of rich farmers, corporates and politicians who are rolling in money but successfully evade taxes.
There are farmers who have several acres of agricultural land and earn millions through farming and drive luxury cars. Yet they do not pay any tax. There are corporates who transfer wealth to their extended family and pay a token tax. A plethora of exemptions and deductions help business houses to pay nominal tax despite hefty profits. And, as for politicians, activists have been crying hoarse about the Swiss bank accounts and their connection with political bigwigs.
Tax experts say that there several areas which can be used to identify the spending power and then tax the incumbent accordingly but the policymakers do not seem to be interested in taking a cue from any tell-tale signs of riches. In a nation where there is an increasing number of billionaires, the revenue accrued from the rich is truly paltry.
In fact, it is not the rich but the poor middle class that ends up paying all the taxes, honestly, as their taxes are deducted at source from their salary. It is indeed surprising that why the tax net is not being cast widerIJ Tax consultants say that the figure of the rich cannot be merely 42,800 only. It is much higher, perhaps 10 times the official number, they add.
It is imperative that we have legally recognised parameters to identify the rich to get rid of the disparity in the tax system. Since most of the times we look at the West for copying solutions, it would not be bad idea if we ape their tax system also where everyone pays tax and not just the middle-class.