Economy

An income tax is a tax imposed on individuals or entities that varies with their respective income or profits.The Indian scenario of income tax returns is a worrisome due to wide tax evasion and non-tax compliance.Only about 4.3 crore citizens of the teeming 130 crore population file their income tax returns.This shows that voluntary taxpayer are very few in India.

The government should initiate the following steps to foster income tax collection in India.They are-

1.Value added tax lottery system-

• Countries like Malta and Greece has been succesful with this scheme.It has increasetheir  entries for income e-filers.
• To boost the tax compliance, India should also start this scheme.

2.Discounts and cash-backs- Taxpayers who pays advance tax and file early IT returns should be incentivized with discounts and cash benefits.

3.Reward mechanism of top-bracket taxpayers-

• The declaration of income above 100 crores  was only 1216 taxpayers in FY2015 ,according to Central Board of Direct taxes.
• So the top-brackets taxpayers should be valued and priveledged customer treatment should be extended to them.Some ways for this can be giving free passess or reserved bookings on Air India or Indian railways and issuing appreciation certificates to all large taxpayers which there has been move by Indian government this year.

4.To boost the willingness to pay for tax ,the government should enhance the transparency level for tax collection and tax spending and show to  public.One way to do is to  share the real time data on how the various cess like Education cess,Swachh bharat cess etc. collected is being spent for public goods.

5.The government should also ensured equity,certainty,convenience and simplicity in taxation.