[Cessna182]

A very informative article about government revenues and spending in India. While 1 percent pay incometax, tax administration takes 5+% of the total government spending. This is more than what the government spends on research, education etc. combined.
https://m.timesofindia.com/business/...w-india-spends

[ashokrajagopal]

Originally Posted by Cessna182

A very informative article about government revenues and spending in India. While 1 percent pay incometax, tax administration takes 5+% of the total government spending. This is more than what the government spends on research, education etc. combined.
https://m.timesofindia.com/business/...w-india-spends

What exactly is this Tax Admin ?
If it is cost of collection of taxes, this is wrong.
Cost of collection of Direct taxes is about 0.6-0.7% of the total tax collected.
For Indirect taxes is about 1% IIIRC. This is published by IT dept.

[srishiva]

Why cant we all move to indirect taxes ? Why only few have to pay both ?

There is something really wrong with this country and there is good chance that its the people who elect. Just look at the buildings and infrastructure that the Income tax department has. What is all that for ?

[avishar]

Originally Posted by Cessna182

A very informative article about government revenues and spending in India. While 1 percent pay incometax, tax administration takes 5+% of the total government spending. This is more than what the government spends on research, education etc. combined.
https://m.timesofindia.com/business/...w-india-spends

This incorrect.

Logically speaking it won't cost 5% of budget (which would come to Rs 1.5 lakh cr.!!) to collect taxes.

It hovers around .5% to 1% of total tax collection.




https://www.cbic.gov.in/htdocs-cbec/...enueCollection

[ashokrajagopal]

Originally Posted by srishiva

Why cant we all move to indirect taxes ? Why only few have to pay both ?

There is something really wrong with this country and there is good chance that its the people who elect. Just look at the buildings and infrastructure that the Income tax department has. What is all that for ?

Because we are not Monacco.

Unless we import everything in the low end of value chain (and tax the hell out, to about 30-35%) and everybody works in making top end of value chain stuff, there is no way to only rely on consumption taxes.

But then, if 1/6th of world population is producing top end of value chain stuff, who is going to buy all that top end stuff ?

[ach1lles]

Originally Posted by V.Narayan

Of these 3.3 crores 1.46 are declaring an income over Rs 5.0 lakhs.

There's really nothing else to say here. I was about to make a similar post but it wouldn't be as nuanced, detailed, or accurate. Thanks V.

I'd just add that let's reverse the reporting to include a yearly report card for the government on all revenue collected, and all expenditures incurred. Give us a yearly balance sheet. Where's the money going? How much is coming from where?
What is the monetary competence level of your governance?

[srvm]

Some folks have quoted a mean per capita income of about 1.4-1.5 lakhs per annum. And compared it with tax slab of 5 lakh. ok, I get it.

Now, somehow I'm unable to comprehend/juxtapose this along with auto sales in the last few years. Prices of many sub-4m cars have gone north of 10 lakhs. Folks are still lapping them up. Sales were going well (pre-covid). I see more RE Bullets and KTMs on the road than say splendors and CT100s. Activa is close to 80-85k on-road but still breaking sales records. Something just doesn't add up! People are able to afford such 2/4 wheelers but mean per-capita income is only a mere 1.5 lakhs! how?

I don't mean to sound sarcastic. I'm trying to really understand this.

[drsingh]

About 65-75% of the population works in the Agriculture sector. Here prices are controlled and farmers have no free market access.

The government market purchase system and FCI levy between 6%-12.5% lagaan on agriculture produce. In some cases more , due to road cess etc. Commission agents and transporters etc. storage charges etc.

Taking 50% gross profit margin ( which is very generous, and is much higher than average) , if total gross tax is assumed 12.5% , this Lagaan system basically levies atleast 25% income tax on the entire agriculture sector.

Individual tax filings aside, if you start counting individuals like children (who contribute labour to running of family based small farms ), you will run afoul of child labour laws in our country.

Agriculture sector is the peasant class the entire middle class and elite class rests on.

Cheaper raw materials, denial of free market access, denial of agriculture futures trading, denial of educational and healthcare facilities, denial of use of lands for non-Agriculture purposes. Taxation on farm inputs , denial of loans for mass mechanisation, denial of input tax credit, denial of registration of farm as a business to account for costs, denial of tax refunds.

This thread title is a misrepresentation of facts on the ground.

Unless an Indian citizen is taking active measures to evade taxes, I suspect every citizen is paying 50% of gross income as taxes.

The 1% of people who show these income tax returns also get access to cheapest and longest tenured loans in our country. Home loans upto 30 year tenure with lowest interest rate. 7 year car loans with slightly higher interest rate than home loans. The rest of the country has to pay as much as 4-5% higher rate of interest at least.

[avishar]

Originally Posted by ach1lles

There's really nothing else to say here. I was about to make a similar post but it wouldn't be as nuanced, detailed, or accurate. Thanks V.

I'd just add that let's reverse the reporting to include a yearly report card for the government on all revenue collected, and all expenditures incurred. Give us a yearly balance sheet. Where's the money going? How much is coming from where?
What is the monetary competence level of your governance?

Well they do, it's called a budget.

https://www.indiabudget.gov.in/


You can go into very deep levels of detail of spending in this (and receipts).

Here is the full Annual Statement (stretches to 14 pages). But this is just the overview.

https://www.indiabudget.gov.in/doc/AFS/allafs.pdf

You can check department level breakups also.

Here:

https://www.indiabudget.gov.in/expenditure_budget.php

You can also read into receipts here:

https://www.indiabudget.gov.in/receipt_budget.php


Statewise disbursements, assets, liabilities, external debt, internal debts, how much money the External Affiars Department sent to which countries, how much did it cost the Mint to print money, how many T-Bills is outstanding etc etc everything.

[Dry Ice]

Originally Posted by srvm

People are able to afford such 2/4 wheelers but mean per-capita income is only a mere 1.5 lakhs! how?

Per capita income is simply country's income divided by population. It does not indicate income distribution in any way.

A small % of high income individuals or a large % of low income individuals can distort this figure either way. In our case, you can imagine which way it swings and why.

A median value which divides the population cleanly in 2 would give a better picture of income distribution in the country.

Vehicle sales may not be a good enough indicator to measure prosperity as it is still very low in our country (~22/1000 people IIRC).

[AZT]

Originally Posted by anandhsub

What is probably a better proof is the very low number of tax payers who show income > 50 Lakhs or 1 crore

You've hit the nail bang on the head. Our problem is under reporting of income, not barbers and plumbers not paying tax. A lot of people file nil returns or as low as they can get away with.
How ~99.5% of all notes came back in the banks and DeMon ended up just making the middle men richer should be a case study.

[1.2TSI7DSG]

Originally Posted by KPR

But only green grass there is that a tax payer is honest. Is there a trophy for that?

Nope... But you may get an occasional certificate

[AseemYadav]

Be assured most of these taxpayers are state and central government servants, who are paid by the government itself. They have no way of wriggling out of it, otherwise they would not pay it as well, if given half a chance. We are a nation of petty babus and thieves.

[fhdowntheline]

One way forward is to mandate cashless transactions beyond say, Rs 10000 and apply a flat banking transaction tax.

[Thad E Ginathom]

Originally Posted by srishiva

Why cant we all move to indirect taxes ?

I guess this immediately gets political, if not by party then by the socio-economic effect of policy, whatever policy it is.

I am ok with paying my way by having my income taxed. I find that fair and proportional, and, almost by definition, I can afford it. I detest indirect taxation.

But the main reason that I detest indirect taxation is not because of the hefty amount that it adds to our spending on what might be called luxury items, from flights, through cameras etc, to vehicles, but because it means that if a person with one tenth the income that I have, and I, both buy the same thing, we both pay the same tax. That is not fair and it is not proportional. And the poorer a person is, the harder that hits.