[SchrödingersCar]

Originally Posted by avira_tk

Tax evasion is not the problem here, our per capita income is way below the tax threshold, most people will never qualify for taxable income in their lives. To put this in perspective, if we achieve the $5 trillion gdp target, will end up with only half the population above the threshold, that's average, actual numbers will be far lower. This moaning about income tax seems to be the most fashionable cause on this forum, if you are paying income tax, your life is pretty good, better than most working people in this country.

I think you are over simplifying things a bit here sir.

1. Direct vs Indirect Taxes (e.g. Taxes on Car Purchase, Road Tax, GST on Insurance, Taxes on Fuel): People are having to pay IT first, and then also taxes based on consumption, whereas there are legal ways to circumvent it by purchasing through company, which not everyone has the means to go with. So effective taxation is close to 50% if not more.

2. 99% of the tax base would not mind paying taxes if that moolah was being put to good use. In most cases it is not. Roads still have potholes, traffic signs and signals don't exist in many places to name a few peeves. You have to pay direct taxes, indirect taxes, road taxes and then also have to pay for maintenance of your car, due to damages from bad roads, be it tyres or suspension or any other damage.

3. Stupid policies like the NCR rules.... won't even go into details of forcing people to change cars by siding with the Auto lobby.

Simple fact is that most people would be happy to pay taxes if the money is used wisely for the benefit of the people, and genuine upliftment of the economically backward strata. Else this vicious cycle will continue.

[rahulvv]

Originally Posted by anb

Actually we should be happy, not frustrated. In order to become a tax paying citizen, one need to earn more than Rs.40000 per month. Less than 10 % Indians earn more than Rs 40000 per month. We should be lucky to be part of that minority. Two-third of the population (68.8%) of India leave under poverty as they earn less 2 dollars per day.

Well - the 10% show the income of more than 5L either because they have no choice (Salaried). Look at the businessmen who manipulate their accounts left right and centre to evade taxes (Babus are hands in gloves with them).

Salaried class is literally carrying the burden of the wealthy and the poor of the nation ! Such a shameful state of affairs

[ashokrajagopal]

So, this is a tad dated, ie. from the time 2021 budget came out in February, but basically conveys the point. For latest numbers, pls check CBDT websites.


This right here is a short summary of why the corps love the current government. Also, this clearly defines subtle class politics.

2021 is estimate based on FinMinister rest are actual numbers.
2020 is Covid year, understandably taxes should be less.
But indirect taxes follow the same trend of increase as previous year
Look at Corp tax estimate for 2021. It's less than 2017.
This is why all the electoral bonds go in one direction.

The budget document clearly shows another thing.
For every year, they do the Budgeted expenditure and at the end of the year, for the next year's budget they do a revised estimate, partly based on actual collections etc.

For the Covid year, (in lakh crores)
Corp Tax: Budgeted 6.8 Revised 4.46
Income Tax: Budgeted 6.38 Revised 4.59
Customs: Budgeted 1.38 Revised 1.12
GST: Budgeted 6.9 Revised 5.15
Excise: Budgeted 2.67 Revised 3.68

All other taxes went down and Excise paid for about half of that.
It is high time the "Income Tax paying, therefore complaining" middle class to stop throwing stones at the poor.

You will see tons of rhetoric on the media about taxes. But at the end of the day, this govt shifted tax regime from Corp tax+income tax to Indirect taxes heavy regime.

It will take just about 10 years for the current middle class for this to be clear in their life. When today's children grow up to their early 20s, they will be walking talking non earning tax payers and it will suddenly dawn on the parents.

In 2014 Corp tax to income tax was 4.2 : 2.65. Now it's 5.47 : 5.61. This govt is going to get a lot of funding in the future too.

[wildsdi5530]

Our income tax base is low because of our irrational tax slabs concentrating on the higher end of the income pool.
If the slabs were revised to
>5K per year - No tax
5K - 1L - 10%
1L - 10L 20%
10L - 25L 30%
25L - 1 Cr 45%
>1 Cr 75%
Then we could expect a much bigger tax base including almost 18-20% of the population.
Of course including Farmers, police, bureaucrats and politicians into the tax bracket will increase the base to around 40-50%.

[m8002?]

Originally Posted by ashokrajagopal

So, this is a tad dated, ie. from the time 2021 budget came out in February, but basically conveys the point. For latest numbers, pls check CBDT websites.

In 2014 Corp tax to income tax was 4.2 : 2.65. Now it's 5.47 : 5.61. This govt is going to get a lot of funding in the future too.

Thanks for that insightful post.

The whole purpose of having a lot of exemptions for business was higher tax rates. Now that the corporate tax is b(r)ought down, shouldnt the exemptions be removed?

It was well explained in the Fuel prices thread. The reason for the high fuel excise rates is to offset the loss of corporate taxes. Basically, the govt. decided to privatise the profits and make public pay for the taxes and losses.

[avira_tk]

Originally Posted by wildsdi5530

Our income tax base is low because of our irrational tax slabs concentrating on the higher end of the income pool.
If the slabs were revised to
>5K per year - No tax
5K - 1L - 10%
1L - 10L 20%
10L - 25L 30%
25L - 1 Cr 45%
>1 Cr 75%
Then we could expect a much bigger tax base including almost 18-20% of the population.
Of course including Farmers, police, bureaucrats and politicians into the tax bracket will increase the base to around 40-50%.

This will lead to more tax evasion and higher enforcement costs. Taxes for those earning 1 lakh a year? Get real. Increasing the tax base to 50% will mean even higher taxes to support the massive increase in the size of the tax department, the law of diminishing returns will kick in then.

Farmers are exempt from income tax, mostly because the majority aren't earning enough to live off the land. Also, the government destroys earnings by preventing export when prices are high and doing nothing when prices collapse. In short, low food prices ie farmer poverty, wins elections. You'll always have urban news presenters screeching that people have had to forego their weekends in Singapore because onion prices are at an all time high. Policemen , bureaucrats and politicians are taxed for their salaries, not income, they're already in the tax net.

[Bhargav7]

Originally Posted by m8002?

The whole purpose of having a lot of exemptions for business was higher tax rates. Now that the corporate tax is b(r)ought down, shouldnt the exemptions be removed?

The exemptions are removed. The corporate tax rate of 22% (effective rate - 25.17% including cess an surcharge) mentioned in the earlier posts is based on section 115BAA. Once a company opts for this concessional tax rate, most of the exemptions available are removed including the SEZ benefits. In a way, this is a good step to simplify tax structure and make a level playing field for all companies (no more preferential tax treatment for "some" companies).

Further, I still believe that the corporate income tax in India is on the higher side. This is because, the dividends paid to the shareholders is taxed again - effectively leading to double taxation. In comparison, most of the states in USA have a tax rate for corporates in the range of 15-21%. It is approximately same in Europe as well, except France and Germany where the tax rates are marginally higher.

India relies a lot on Corporate taxes as the Individual tax collections are paltry in comparison to the size of our country. The reason for low individual taxes is well articulated in some of the earlier posts in this thread. While we may feel that we are being robbed in the name of taxes, the effective tax rates for individuals in India is one of the lowest globally.

[xway]

This has no justification at all.

It is single handedly exploitation by ruling Government, as there is no formidable opposition.

Infact India ranks at the bottom of most taxing countries on fuel now.
It is even worse than poor countries also like Bangladesh, Nepal, Pakistan and others.

And fuel prices impact everything and spikes inflation which does not go down even if prices reduce in the future.

How else can one justify -

Cooking Gas - from 400 to 850 now (fyi Ujjwala subsidy has been stopped since 2 years)
Pulses - from 80-90/kg to now 140-200/kg
Cooking oil - from 90/ltr to now doubled 190/ltr

Even prices of leds, televisions, laptops, mobiles electronics which reduce over time, have increased in last 2-3 years.

I had purchased a laptop 2 years back and was looking for an upgrade by paying some more, and surprising found my same laptop which is priced 20% more than what I had paid, that too after 2 years.

Government has taken its citizens for granted and does not care a hoot.

[rjainv]

Originally Posted by Bhargav7

While we may feel that we are being robbed in the name of taxes, the effective tax rates for individuals in India is one of the lowest globally.

Can you pls add a little more explanation that helps us understand how this is true?

[meto]

Why dont all the tax, excise paid above a certain amount be linked to aadhar and be a part of the deduction from the ITR? This seems completely logical, shouldn’t be very hard to implement and bring a parity across the board and would reduce the double taxation. But i am sure this will never happens as people will start tracking the amount of tax they pay per year.

[Stribog]

Originally Posted by for_cars1

The right thing for the Government to to is to:
1. Either abolish Income Tax for everybody and just tax commodities and services at the point of sale.
OR
2. Lower taxes on commodities and services for Income Tax payers. Either lower tax at the point of sale or as a refund, so that the 1% of the income tax payers are not double taxed.

Hope better sense prevails.

India's Direct tax collection has been growing and growing consistently.

1997 - Rs 1,00,000 Cr
2004 - Rs 2.5l Cr
2014 - Rs 7 l Cr
2019 - Rs 11l Cr

It has in fact been growing exponentially.

Direct Tax Buoyancy has gone from 0.6 in 2016 to 1.9 in 2019
Direct taxes as a percentage of GDP went from less than 2% in 2005 to 6% in 2019 (the GDP has grown exponentially, so this is on a larger base)

Individual tax payer bases has also grown exponentially and continues to grow.

2004 - 3 Cr
2014 - 5.2 Cr
2018 - 7.4 Cr

Our population has not DOUBLED in this period so clearly the income tax base is growing.

So by every yardstick, direct tax collection is growing, forms 25% of our govt revenues, individual tax payer count grows far more than GDP or pop growth.

Why is this not better sense prevailing?

Originally Posted by anb

Why should poor people (majority) has to suffer for government’s inefficiency to collect taxes ? If the direct tax collection is low, why the corporate tax reduced from 30 to 22% instead of increasing ?

Why not increase corp tax to 99% or something absurd like the Indira Gandhi govt did?

Fact is, India had one of the highest corp tax rates in the world at 30%, rationalising it only incentivises companies to set up shop in India.

Corp tax collection grew last year DESPITE it being pandemic year.

India is receiving record FDI inflows, esp in sectors like greenfield electronic manufacturing which will generate jobs and exports. This coupled with PLI schemes would mean more and more corporates ARE actively disengaging from China or at least spreading their supply chain capabilities. A rationalised corp tax structure will help India.

"Taxing More" gets better revenues is an archaic concept, taxing more only gets corporates to flee to tax havens or flee entirely.

Originally Posted by Equus

Under 25 age group + Farmers + evaders is a large number. If the tax base does not widen, there is always going to be surrogate ways of taxing everybody (and this includes people paying taxes as well). GST has helped widen the tax base significantly though you know how people still evade.

Hope they bring petrol under GST and stop milking it.

There is a huge infrastructure creation drive underway, which requires money to fund it. The same infrastructure we BHPíans love to drive on and pose and take pictures on.

Fact is, not even 5% of the population owns cars, 40% of the population walks to work, a huge chunk cycle to work. Fuel in the WPI basket is at like 5 weightage (so not very relevant at all though I quote this from memory and might be wrong on this fact). Fuel prices do NOT touch the majority of the population - and I include the indirect cost impact on food and other essentials which are subsidized by the state anyway for the bulk of the population.

[Acharya]

I am actually quite relieved as a income tax payer to see high petrol/diesel prices. The whole expense of pandemic had to be bourn by someone, fortunately government has decided to spare the regular sacrificial goat i.e. income tax payers.
I was expecting a covid surcharge or increase in rate for higher income brackets in last budget, fortunately we escaped it.

When a common commodity (gasoline) is taxed, it's universally applied on all people and there is no tax evasion. In fact govt should continue to increase indirect taxes and reduce direct income tax on individual and corporates.

Just my one cent (post tax) .

[AutoNoob]

Sharing just for reference :

India losing $10.3 billion in taxes per year due to tax abuse by MNCs, evasion by individuals

Source : Deccan Herald
Date : 20-Nov-2020

India is losing over $10.3 billion (about Rs 75,000 crore) in taxes every year owing to global tax abuse by MNCs and evasion by private individuals, a report said on Friday.

the report said $10.3 billion, or 0.41 per cent of the $3 trillion GDP, is lost in taxes every year to global tax abuse.

Of this, over $10 billion is lost to tax abuse by multinational corporations (MNCs) and $200 million to tax evasion committed by private individuals.

The social impact of the lost tax is equivalent to 44.70 per cent of the health budget and 10.68 per cent of education spending. It also equals paying yearly salaries of over 42.30 lakh nurses.

It further said India is most vulnerable to illicit financial flows in the form of outward FDI and listed Mauritius, Singapore and the Netherlands as the trading partners which are most responsible for this vulnerability.

In Kanpur, chaat sellers turn out to be crorepatis, Income Tax, GST probe reveals shocking details

Source : DNA
Date : 20-Jul-2021

Details of not one or two but more than 250 such millionaires in Uttar Pradesh's Kanpur have come out in the open.

These people are found in the middle of the market or on the road with selling chaat, crispy-kachori, chai-samosa, and paan shops. Traders who have been doing such work for many years without taking the FSSAI certificate assuring food safety, wrap up the goods on the arrival of the police and committee.

The Income Tax Department had been keeping an eye on these hidden 'Dhannaseths', who looked poor. In the investigation of the Income Tax Department and GST registration, 256 sellers have come out as crorepatis. When their details were probed with the help of data software and other technical tools, the officials of the IT department were stunned.

these traders did not pay a single penny of tax outside the GST registration, but in four years, property worth more than Rs 375 crore was purchased. KVP worth more than 30 crores was also purchased, along with 650 bighas of agricultural land.

Some people resorted to cooperative banks and small finance schemes to hide this money from government eyes, while many people invested most of the property in the name of their brother, sister, sister-in-law, uncles.

In the year 2019, a very shocking case came to light in Aligarh. In the investigation, the team of the Commercial Tax Department had revealed the case of a small snack trader having an annual turnover of Rs 60 lakhs.

[WhiteFang]

This data made me doubt the genuineness of government's EV push planned for the coming years.

Why should they promote something which will reduce such a good source of ever growing tax revenue like petroleum?. This will put two major stakeholders of EV transformation on backfoot. Manufacturers shying away from huge investments and threat to government's tax revenue.

I dont think EVs will come anyway near mainstream in this decade.

[charanreddy]

Originally Posted by anb

I am surprised by the fact that you are considering new born babies and students to pay income tax. Over 46% population in this country are below 25. How they are supposed to pay income tax ?

Irrelevant. Lets assume we have 1 adult working in a family of 4. So at the very least tax coverage needs to be a fraction of 25% (Say 30% of 25% which is ~8%).
I personally know of so many business men who earn in crores and underreport the income so they pay laughable taxes. I know of many small businessmen who earn in 10s of lakhs but don't pay commensurate IT.

Originally Posted by anb

Actually we should be happy, not frustrated. In order to become a tax paying citizen, one need to earn more than Rs.40000 per month. Less than 10 % Indians earn more than Rs 40000 per month. We should be lucky to be part of that minority. Two-third of the population (68.8%) of India leave under poverty as they earn less 2 dollars per day.

Is this declared wealth or actual income ? I am sure India is a poor country but not so much that 1% needs to carry the rest 99%. Per your estimate "Less than 10% should have paid Income tax".

Originally Posted by avira_tk

Thanks for pointing out what should be obvious, some people here are absolutely clueless about income levels outside their corporate sanctuaries.

Tax evasion is not the problem here, our per capita income is way below the tax threshold.

Fair point in general. The OP is not asking 50% of India to pay taxes. He is asking the well to do people to pay and not hide incomes. This is fairly obvious IMHO. I see local super markets giving white paper bills, local real estate guy buy second hard premium cars to evade the tax net, Local Furniture walla demand money in cash. How many of the guys give a tax bill ? An average business man in Bangalore earns much more than a entry level software engineer, but I bet his tax will be miniscule if not zero.