Four per cent people pay income tax in real term

It is worrisome that in a country of population of 140 crores, approx. 8.1 crores people file income tax returns and less than 4% people pay income tax in real terms. This needs to be analysed. This may be due to fear in the minds of people filing ITR. Fear may be due to excessive regulations, notices, penalties and complicated ITR forms. Earlier, Sahaj Form used to be 2 pages, but now it is more than 20 pages. Even simple dividend income in a year of Rs. 100/ has to be shown in five divided parts of the year. Will dividing it make more than Rs.100/-? Such complications are not user friendly and to be seen in right perspective. All regulations are only for the people who are paying tax and have to face various queries from IT department. The people dealing in cash are not in any financial system and take advantage of earnings. There is a large amount of tax revenue leakage. This may be minimized by restricting cash transactions. There is excess cash in circulations which should be cut. Banning cash transaction more than Rs. 10,000/-. It means any transaction more than Rs.10,000/- has to be in electronic/digital. This will not only reduce tax leakage but also limit the activities which are not permitted by law. It will also reduce the cash which is being seized. We have nearly 18 crores Dmat accounts (both CDSL and NSDL) but only approx. 8.1 crores people filing ITRs. This may also be seen, how to increase the number of tax filers for increasing tax revenue. Cash looks to be one of the main reasons for avoiding paying income tax as they do not come under any tax net. Finance Minister may like to consider the above points for increasing tax revenue and a tax payers friendly environment. We have to reduce the trust deficit between tax administration and tax payers. With regards

Naveen