The book was released in January 2013 by Sri. Narendra Modi, Chief Minister, Government of Gujarat INDIA.
Need for tax reforms: Total individual tax payers in India is hardly 3.5 crore out of 120 crore population. It means tax compliance is barely 3% as compared to 45-50% in the USA.With such massive non-compliance, it is better to amend the law instead of converting everybody as law violators. It is therefore, recommended to replace 'personal income tax' through expenditure tax and then merge it with GST (Goods and Services tax) which will be revenue neutral. It will not violate legislature intention to tax rich persons and to re-distribute among others.
There is general reluctance from unorganized sector for keeping themselves within the net of indirect taxes like VAT and service tax. This is mainly due to tax hazards, compliance cost and fear arising out of compliance formalities. Introduction of GST will be a good solution, provided it is simplified for SMEs. Merger of multiple taxes will become an incentive for compliance. Some special provision may be incorporated for small enterprises such as self assessment and exemption for maintaining books of account.
High rate of Stamp Duty is a deterrent in land and real estate business for disclosing full value of the transaction which should be slashed down to 2% on uniform basis in the country. Some tax incentive may be extended on long term capital gain arising out of sale of land and real estate. This should convert majority of real estate transactions into its full value. Therefore, deployment of black income on real estate shall also reduce.
If the Government hence, takes a bold step to merge personal income tax into GST, the result could be astonishing on the front of savings and investments without any loss of revenue. In addition, government borrowing cost is likely to reduce by about Rupees one lakh crore. Non tax revenue and capital receipts should be increased with similar innovations.
Need for tax reforms: Total individual tax payers in India is hardly 3.5 crore out of 120 crore population. It means tax compliance is barely 3% as compared to 45-50% in the USA.With such massive non-compliance, it is better to amend the law instead of converting everybody as law violators. It is therefore, recommended to replace 'personal income tax' through expenditure tax and then merge it with GST (Goods and Services tax) which will be revenue neutral. It will not violate legislature intention to tax rich persons and to re-distribute among others.
There is general reluctance from unorganized sector for keeping themselves within the net of indirect taxes like VAT and service tax. This is mainly due to tax hazards, compliance cost and fear arising out of compliance formalities. Introduction of GST will be a good solution, provided it is simplified for SMEs. Merger of multiple taxes will become an incentive for compliance. Some special provision may be incorporated for small enterprises such as self assessment and exemption for maintaining books of account.
High rate of Stamp Duty is a deterrent in land and real estate business for disclosing full value of the transaction which should be slashed down to 2% on uniform basis in the country. Some tax incentive may be extended on long term capital gain arising out of sale of land and real estate. This should convert majority of real estate transactions into its full value. Therefore, deployment of black income on real estate shall also reduce.
If the Government hence, takes a bold step to merge personal income tax into GST, the result could be astonishing on the front of savings and investments without any loss of revenue. In addition, government borrowing cost is likely to reduce by about Rupees one lakh crore. Non tax revenue and capital receipts should be increased with similar innovations.
