Shadow

(Budget suggestions) Introduce new simplified Income Tax Act to replace six-decades old outdated Income Tax Act 1961 with simplified tax-regime

Our six-decades old outdated Income Tax Act 1961 which is full of amendments, needs to be replaced by an altogether new Income Tax Act which may be simple-most abolishing additives and deductive like cess, surcharge and exemptions with tax-rates incorporated in new Income Tax Act according to recommendations of Raja Chelliah Committee.

Maximum tax-rate at one time used to be effectively as high as 98-percent causing hihgh level of tax-evasion with people paying upto even 52-percent to whiten black money. However good sense prevailed and maximum tax-rate was slashed down to just 30-percent in tune with most other countries of the world in accordance with recommendations of Raja Chelliah Committee. But gradually surcharges, cess etc have again raised effective tax-rate to now about 50-percent.

New Income Tax Act should fix tax-rates at 10, 20 and 30 percent even though taxable amounts may not be included in Income Tax Act to keep flexibility on taxable income under fixed Income Tax rates without any cess or surcharge. Idea should that people may find it advantageous to declare more and more incomes by inducing healthy competition for tax paid in our status-conscious society by giving special national honours through President or Prime Minister for those paying more taxes. Some gimmick facilities like jumping queues at airports or railway-stations and other public-dealing counters may be provided to those coming in highest tax-slab.

At the same time all tax-exemptions including on agricultural income, charity and contribution to political parties may be abolished now with basic exemption-limit raised to rupees five lacs which may be reviewed periodically. A permanent Voluntary Disclosure Scheme may be there whereby income from undisclosed sources may attract maximum tax-rate of suggested 30-percent with extra 20-percent be deposited in new-to-be introduced 10-years bonds with some nominal interest-rate. At the same time loopholes from GST system may be plugged out so that India may move towards cashless economy. GST rates should be minimized to just two slabs of 10 and 30 percent with provision of Input-Tax-Credit (ITC) retained only on trading purposes to avoid false ITC claims in non-trading sector after normal GST rate slashed down from 18 and 12 percent to just 10 percent. Instead of cess, special GST rates can be in multiples of 50-percent for luxurious items presently attracting cess in addition to highest 28-percent GST slab.

SUBHASH CHANDRA AGRAWAL

Leave a Reply

Your email address will not be published. Required fields are marked *