India has nearly 1.1 billion people but there are just a little more than 30 million tax payers. This is a bit shocking figure- isn’t it? Well, you may argue that India is a poor country and that is why so few people can pay tax. Yes, it is true but then what about 300 million or more people who are supposed to fall under the category of flourishing middle class. Of course, in a family, just one or two persons have to pay tax. Still, the number of tax payers should be higher.
One reason that people try to evade paying tax is that the law regarding tax is old and also the process is complicated. So, Indian government is going to introduce a simplified tax law in 2008. I am quoting from a report of Reuters:
“The cash-strapped government is aiming bring more people under the tax net to boost its revenues and cut the federal fiscal deficit to 3 percent of gross domestic product by 2008/09. The deficit was 4.1 percent in 2005/06.
The country’s archaic and complex tax laws deter many well-off people from paying taxes, and drawn out legal procedures soak up billions of rupees. Corruption and weak tax collection systems add to the government's woes by encouraging evasion.
At present, little more than 30 million people out of a population of 1.1 billion pay taxes.
As part of efforts to reform the system, the government set up a panel in 2005 to look into solutions, and the body submitted its report on Friday.”
So, let us hope for the best. I wish that the new law will be simple enough to encourage more and more citizens to pay tax.
Hi,
The Indian government should provide some kind benifts to the tax payers. Like discounted sales tax, benift after retirment, medical benifts etc., that may encourage tax payers are atleast tax payers will feel happy about paing the tax. What ever we are getting is indirect benifts only, instead if it direct benifts, then people will pay tax.
Thanks,
P. Surendra
Posted by: Surendra Prithvi | January 7, 2008 6:18 AM | Permalink to Comment