India has been evolving continuously in one field. The progress has been remarkable. It is in the area of Income Tax which comes under the purview of the Finance Ministry of the central government.
Without income no country can progress. So tax collection, that too efficient tax collection, is essential for any country to survive without begging or borrowing. It is a very tricky area in a democracy. Hence, this ministry is normally entrusted to some one who is the better among the lot in the cabinet of central ministers.
In India, the presence of the central government is during the annual budget presentation by the central finance minister. The Indian people who earn some income feels the pinch or pamper during the day when the secretive central budget is read out in the parliament !
Some decades ago, Income Tax never contributed much to the governmental income. In those days, the indirect taxes on commodities used to be the main income of the government. In those days the tax rates on incomes also used to be extremely high. Perhaps as high as 80 % or more. Who would like to earn more for paying everything to be taxed by the government ? Perhaps none. So in those days only a few people actually declared their incomes to be taxed. Black money or money unknown to the government and outside the clutches of the taxmen became the dominant factor in the Indian economy due to this.
Slowly, the Indian tax advisers and the political leadership understood their folly. Income tax rates got considerably reduced. As of now, it is roughly anywhere between 0-38 %. Campaigns on compulsory Permanent Account Numbers (PAN) for tax payers and computerisation have widened the tax net and as of now Income Tax has become one of the major contributor to the income of the central government in India.
An annual income above $ 4100 (Rs.250,000) is taxable in India now. Women and aged people are given some extra benefits ( I do not understand the logic because every rupee matters for those who are in the lower age groups and the men who are supposedly supporting the majority families in India !)
So far the actual incomes of the majority people in India were not fully known to the government. As per the latest Income Tax information, there were only 42,800 persons in India who declared their incomes over Rs. one crore ($ 164,000) per year while the actual situation is generally felt as much higher.[See Report here ]
This is because, the actual recorded incomes are for the salaried class of people who have no opportunities for hiding their legitimate incomes. In this case, the employers are bound to deduct the tax at source and remit the tax deducted to the government account periodically. The salaried class and those earning pensions are the people who does the filing of the tax returns without fail. So far, those of this category with incomes above Rs. 500,000 ($ 8000) per year were required to file the returns before the due date every year. This year the government has made it mandatory for even those salaried people whose incomes are even lesser.
This kind of a return filing, in my opinion could be easily avoided. Thousands of useful man days are lost in India every year because the salaried class of people sit and break their heads in filing their returns for the taxes they had already paid. The income tax staff all over the country waste their time and efforts in compiling that data and sending error notices and rectification notices.
Every year, the tax authorities come up with different kinds of return forms. Every year the tax rules are changed under various schedules. Even the most educated lawyer in the country is not comfortable with the tax rules and stipulations. Imagine the situation for the 'poor' tax payers of India, who are just educated to do their own work ! Now one can imagine why Indian offices do not work properly during the days of annual tax return filing months !
This could perhaps be a typical example of penny-wise pound foolish culture that has been prevalent in India for quite some time ! Tax return filing is indeed a citizens responsibility. However, making that compulsory even for those marginal income groups whose taxes have been deducted at source is something ridiculous. At least that should be the case for all those salaried income people whose incomes actually do not go beyond 1 % of their recorded salary income for which taxes are deducted in advance. A certificate of tax deduction at source should be deemed as equivalent to a tax return in such cases.
Just imagine the unnecessary data processing load that could be avoided by just one such step ! Besides, it would free the thousands of salaried people from the worries of filing the tax return forms that are fancifully designed every time by some tech freaks or accountants without much consideration to the mind levels of the thousands of individual tax payers. Is it justified to cause metal tensions to the people who are actually paying their taxes in time ? Every time the finance ministers do declare simplifying the tax return forms. But in practise it has been observed that it has turned much complicated every time !
No doubt, originality is a strange thing in India. Copying systems and practises from developed worlds like the USA with some adaptation is quite an acceptable practise. The numerous tax return forms and the numerous taxation clauses are all perhaps due to such a thing. Sadly, what the Indian authorities fail to realise is the fact that India is not a literate state as the USA.
While bench marking with a country like the USA, it is interesting to note the logical taxation rules in that country.[ Read This !] There too, the tax rates are between 0-39 %. But these rates are divided in about 7 slabs unlike the 4 slabs that is in India. In the USA, they give much importance to the family as a head of a family is taxed less as compared to an individual. The tax rates are only 10 % for a family income up to $ 17500 per year (Rs 1 Million). Every citizen with some income has to pay the tax in the USA ( at least 10 %) and this way every earning citizen is a contributor to the national exchequer. I do not know whether all those citizens, including those paying a nominal tax are also required to file the returns like what the Indian government now propose.
The list of tax exemptions and rebates is very big in India. However, these are not for the salaried class. Who all are gaining from such exemptions is some thing to be researched. Now, even deemed incomes for salaried class (except perhaps those working for the Finance Ministry) are taxable in India. No standard deductions any more. But, a self employed person like a lawyer or a doctor or a businessman can get pretty good amounts annually on account of rebates making their net cash availability much more than a salaried person.
It is not a secret any more that many employers find loop holes in the tax rules to extent benefits to their employees on account of peculiarities in the taxation rules. However, this is only done by progressive employers and not all employers are keen to do such things. Thus, even in the employee class, differentiation naturally take place making some employees better of than some others even with their gross reported incomes appear as same.
The Indian society gets divided this way. Remember, this was what the rulers of the past adopted. Divide and rule ! There are several such things that divide the Indian society ! Who gets the advantage is only to be guessed !
Is the tax policies made for the country under some justifiable logics or is it made under whims and fancies ?
I am not sure. I am confused !
But I seriously think about this. Couldn't we do any better ? Better for the people in general and for the nation ?
Without income no country can progress. So tax collection, that too efficient tax collection, is essential for any country to survive without begging or borrowing. It is a very tricky area in a democracy. Hence, this ministry is normally entrusted to some one who is the better among the lot in the cabinet of central ministers.
In India, the presence of the central government is during the annual budget presentation by the central finance minister. The Indian people who earn some income feels the pinch or pamper during the day when the secretive central budget is read out in the parliament !
Some decades ago, Income Tax never contributed much to the governmental income. In those days, the indirect taxes on commodities used to be the main income of the government. In those days the tax rates on incomes also used to be extremely high. Perhaps as high as 80 % or more. Who would like to earn more for paying everything to be taxed by the government ? Perhaps none. So in those days only a few people actually declared their incomes to be taxed. Black money or money unknown to the government and outside the clutches of the taxmen became the dominant factor in the Indian economy due to this.
Slowly, the Indian tax advisers and the political leadership understood their folly. Income tax rates got considerably reduced. As of now, it is roughly anywhere between 0-38 %. Campaigns on compulsory Permanent Account Numbers (PAN) for tax payers and computerisation have widened the tax net and as of now Income Tax has become one of the major contributor to the income of the central government in India.
An annual income above $ 4100 (Rs.250,000) is taxable in India now. Women and aged people are given some extra benefits ( I do not understand the logic because every rupee matters for those who are in the lower age groups and the men who are supposedly supporting the majority families in India !)
So far the actual incomes of the majority people in India were not fully known to the government. As per the latest Income Tax information, there were only 42,800 persons in India who declared their incomes over Rs. one crore ($ 164,000) per year while the actual situation is generally felt as much higher.[See Report here ]
This is because, the actual recorded incomes are for the salaried class of people who have no opportunities for hiding their legitimate incomes. In this case, the employers are bound to deduct the tax at source and remit the tax deducted to the government account periodically. The salaried class and those earning pensions are the people who does the filing of the tax returns without fail. So far, those of this category with incomes above Rs. 500,000 ($ 8000) per year were required to file the returns before the due date every year. This year the government has made it mandatory for even those salaried people whose incomes are even lesser.
This kind of a return filing, in my opinion could be easily avoided. Thousands of useful man days are lost in India every year because the salaried class of people sit and break their heads in filing their returns for the taxes they had already paid. The income tax staff all over the country waste their time and efforts in compiling that data and sending error notices and rectification notices.
Every year, the tax authorities come up with different kinds of return forms. Every year the tax rules are changed under various schedules. Even the most educated lawyer in the country is not comfortable with the tax rules and stipulations. Imagine the situation for the 'poor' tax payers of India, who are just educated to do their own work ! Now one can imagine why Indian offices do not work properly during the days of annual tax return filing months !
This could perhaps be a typical example of penny-wise pound foolish culture that has been prevalent in India for quite some time ! Tax return filing is indeed a citizens responsibility. However, making that compulsory even for those marginal income groups whose taxes have been deducted at source is something ridiculous. At least that should be the case for all those salaried income people whose incomes actually do not go beyond 1 % of their recorded salary income for which taxes are deducted in advance. A certificate of tax deduction at source should be deemed as equivalent to a tax return in such cases.
Just imagine the unnecessary data processing load that could be avoided by just one such step ! Besides, it would free the thousands of salaried people from the worries of filing the tax return forms that are fancifully designed every time by some tech freaks or accountants without much consideration to the mind levels of the thousands of individual tax payers. Is it justified to cause metal tensions to the people who are actually paying their taxes in time ? Every time the finance ministers do declare simplifying the tax return forms. But in practise it has been observed that it has turned much complicated every time !
No doubt, originality is a strange thing in India. Copying systems and practises from developed worlds like the USA with some adaptation is quite an acceptable practise. The numerous tax return forms and the numerous taxation clauses are all perhaps due to such a thing. Sadly, what the Indian authorities fail to realise is the fact that India is not a literate state as the USA.
While bench marking with a country like the USA, it is interesting to note the logical taxation rules in that country.[ Read This !] There too, the tax rates are between 0-39 %. But these rates are divided in about 7 slabs unlike the 4 slabs that is in India. In the USA, they give much importance to the family as a head of a family is taxed less as compared to an individual. The tax rates are only 10 % for a family income up to $ 17500 per year (Rs 1 Million). Every citizen with some income has to pay the tax in the USA ( at least 10 %) and this way every earning citizen is a contributor to the national exchequer. I do not know whether all those citizens, including those paying a nominal tax are also required to file the returns like what the Indian government now propose.
The list of tax exemptions and rebates is very big in India. However, these are not for the salaried class. Who all are gaining from such exemptions is some thing to be researched. Now, even deemed incomes for salaried class (except perhaps those working for the Finance Ministry) are taxable in India. No standard deductions any more. But, a self employed person like a lawyer or a doctor or a businessman can get pretty good amounts annually on account of rebates making their net cash availability much more than a salaried person.
It is not a secret any more that many employers find loop holes in the tax rules to extent benefits to their employees on account of peculiarities in the taxation rules. However, this is only done by progressive employers and not all employers are keen to do such things. Thus, even in the employee class, differentiation naturally take place making some employees better of than some others even with their gross reported incomes appear as same.
The Indian society gets divided this way. Remember, this was what the rulers of the past adopted. Divide and rule ! There are several such things that divide the Indian society ! Who gets the advantage is only to be guessed !
Is the tax policies made for the country under some justifiable logics or is it made under whims and fancies ?
I am not sure. I am confused !
But I seriously think about this. Couldn't we do any better ? Better for the people in general and for the nation ?
[By the way it is interesting to note this:
The IT e-filing website address for India is this: https://incometaxindiaefiling.gov.in/You may try reaching this site using common browsers such as the Internet Explorer or Google Chrome.
It is possible that this site may not open at all due to ' Invalid Server Certificate' error.
I could open this usingMozilla Firefox but not with the other two.
This only shows the lacuna in the governmental systems which are hastily implemented without proper checks]
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