Honest Set To Gain As FM Cracks The Whip On Tax-Evaders
That tax evasion is a fatal malady that ails our economy was a message that came out quite clearly from Finance Minister Arun Jaitley's Budget Speech on February 1. “For several decades, tax evasion for many has become a way of life. This compromises the larger public interest and creates unjust enrichment in favour of the tax evader, to the detriment of the poor and deprived,” Jaitley said while presenting the current government's fourth Budget. Jaitley cited data to make certain shocking revelations.
- As against estimated 4.2 crore people employed in the organised sector, only 1.74 crore individuals file income-tax returns.
- Of the 5.6 crore informal sector individual enterprises and companies doing small businesses, only 1.81 crore file returns.
- Of the 13.94 lakh registered companies up to March 31, 2014, only 5.97 lakh companies filed their returns for 2016-17.
- Of the 5.97 lakh companies that have filed returns for 2016-17 so far, 2.76 lakh companies have shown losses or zero income, 2.85 lakh have shown the profit before tax of less than Rs 1 crore, and 28,667 have shown profit between Rs 1 crore to Rs 10 crore.
- Among the 3.7 crore individuals who filed the tax returns in 2015-16, 99 lakh have shown income below the exemption limit of Rs 2.5 lakh per annum, 1.95 crore showed income between Rs 2.5 to Rs 5 lakh, 52 lakh showed income between Rs 5 to Rs 10 lakh.
- Only 24 lakh people showed income above Rs 10 lakh.
- The number of people showing income more than Rs 50 lakh is only 1.72 lakh.
“We can contrast this (the data above) with the fact that in the last five years, more than 1.25 crore cars have been sold, and (the) number of Indian citizens who flew abroad, either for business or tourism, is two crore in the year 2015,” the finance minister said. Terming India a largely tax non-compliant society, the FM said his government would focus on higher tax realisation.
“We are committed to make our taxation rates more reasonable, our tax administration more fair and expand the tax base in the country,” said the FM. And, while the Centre strives to achieve this, the common man will have more reasons to cheer as “honouring the honest” would be all-pervasive theme of the next set of the tax reforms. For starters, Jaitley has already halved the tax on an annual income below Rs 5 lakh. As the process unfolds, the property will become even more affordable.
Tax evasion, as a matter of fact, means people stash piles of cash, which is often used for high-value transactions. Being one of the most valuable asset class, real estate attracts the largest part of this (read black money). Those using unaccounted money then drive the demand for properties making them out of the reach of the common man. Strict tax norms would mean such players are eliminated from the market, demand drops and prices see a correction.