More than half of India's 3.4 crore income tax payers contribute insignificant amounts as tax, with figures ranging from a paltry Rs 50 to Rs 1,000 in most cases. This reduces the effective tax base to around 1.5 crore tax payers, which includes mainly corporate houses and the salaried class, according to senior officials of the income-tax (I-T) department.
Well-heeled independent professionals, like chartered accountants, doctors, lawyers, big shopkeepers and wholesale traders make up the category of income tax assessees who add to the number of people under the tax net but contribute virtually nothing to the national exchequer.
Senior I-T officials are of the view that the cost to the department for maintaining these files would probably exceed the tax collections from this category. While even the figure of 3.5 crore income tax assesses is considered small for the size of India's urban population, the fact that the number of effective tax payers is less than half this number makes matters even worse for resource mobilisation.
| Paying peanuts|
- India's effective tax base is around 1.5 crore tax payers
- Chartered accountants, private doctors, lawyers, big shopkeepers and wholesale traders make up the category that pays negligible tax
- Cars and other items are bought in the names of business entities
- Several big retail showroom owners in Delhi report losses in their account books
- The I-T department does not have the manpower or resources to chase all tax offenders
- Often when the I-T dept conducts raids income declarations result in tax collections of as much as Rs 100 cr and above
Independent professionals and traders with lavish lifestyles are reported to be filing tax returns that reflect incomes ranging from a mere Rs 1.5 to Rs 5 lakh a year. The big cars that they use are bought in the names of business entities. "These assesses have been showing withdrawals from their bank accounts of a paltry Rs 10,000 or so to run their monthly expenses, which just doesn't make any sense," a senior official said.
Several big retail showroom owners in the Capital are reported to be showing losses on their accounts books. The financial figures indicate that the business should have been shut down as the premises would bring in a huge rent but this is not happening either, an official pointed out. Senior officials say there has to be a culture of tax compliance that is missing in India.
While tax evasion is widespread, the I-T department does not have enough manpower or resources to chase all the dodgers and make them cough up the due amounts. Since the black money transactions take place in cash it is difficult to track them down. A single assessing officer could be burdened with as many as 10,000 files and it is difficult for him or her to examine all of them in minute detail.
The extent of tax evasion is evident from the fact that when the investigation wing of the I-T department conducts raids on the premises of suspected tax dodgers, the income declarations result in tax collections of as much as Rs 100 crore. In fact a Rs 5-10 crore collection is quite common, a senior official said. According to official figures released on Wednesday, corporate tax collections at Rs 2,78,411 crore, accounted for as much as 83 per cent of the total direct tax collections of Rs 3,36,117 crore during April-February of this fiscal.
The figure show that while direct tax collections grew by 21 per cent during this period, corporate tax went up by 24 per cent. Personal income tax increased by 15 per cent to touch Rs 1,12114 crore, which was mainly from the salaried class.
Courtesy: Mail Today