Mumbai, Feb 26: In less than 24 hours, Finance Minister Arun Jaitley will present Narendra Modi-led government’s first full-fledged budget. Union Budget 2015-16 being the first budget, there are a lot of expectations from the government which promised ‘Achche Din’ in its extensive electoral campaign last year. The talking point of every Union Budget is the Income Tax slab which affects every year to a huge section of the Indians.
Every year, every government devises a new tax slab structure which tries to ease norms for the people who pay income tax. In his interim budget last year Finance Minister increased the limit of income tax by Rs 50,000. Instead of easing norms and increasing the exemption limit in the tax slab, can the government completely abolish the income tax? The answer to it is Yes!
There were widespread discussions on the issue of abolishing income tax when Narendra Modi-led BJP government took over. Before and after the Lok Sabha Elections and even before the interim budget was passed in July last year; there were speculations that the Modi government may do away with the Income Tax.
Senior BJP leader Subramanian Swamy even listed steps as to how should the abolishing of Income Tax will rather help the country increase its savings than losing out on revenue. It is less known that the blueprint of India’s economic reforms in 1990-1991 was prepared by Swamy and not former Prime Minister Dr Manmohan Singh.
Detailed analysis by Dr Swamy:
The Government of India collects only Rs 2 lakh crore as revenue from the Income Tax filed every year. If at all the government decides to scrap the Income Tax wholly, it may garner revenue from other sources- for instance auction of coal blocks and spectrum.
As per the CAG reports, the government will easily procure Rs 1.76 lakh crore itself by auctioning of spectrum. The auction of coal blocks will also fetch government a huge chunk of revenue- approximately Rs 11 lakh crore, said Supreme Court in one of its statements earlier this year. And if the government auctions the 3G spectrum band, it may alone fetch the government an amount of Rs 6 lakh crore- triple of what it acquires from Income Tax revenues.
Another estimate which might second the thought of abolishing the Income Tax completely is that if the black money, roughly amounting to Rs 120 lakh crore, stashed abroad by Indian businessmen and politicians is brought back, Indians may never need to pay their income tax in the whole time.
Why should the Income Tax slab be abolished?
Income tax is usually paid by the middle class in India. The rich and mighty get away by hiring cunning Chartered Accountants (CAs) as they shove their shady deals in innumerable trusts and charitable organisations they have. For the record, Dhirubhai Ambani paid ZERO rupees as Income Tax Returns till 1996. The Birla Group used to show only Rs 80,000 as their annual income.
Another point is that poor people in India don’t fall in the category of paying Income tax as their income levels are too low.
The major contributor to the yearly revenue of Income tax is the people in middle class society. The young entrepreneurs, businessmen and salaried class people are harassed into paying the Income tax. If the income tax is done away with, the savings of this middle class will increase which will boost the India’s economic sphere.
Photo Credits: Jyoti Desale