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Born free, taxed to death but Indians okay with I-T
August, 01st 2008

India's income tax payments are at an all time high and the country is experiencing what analysts call a bonanza of tax payments. From just 1.8 per cent of the GDP in the late 70s, tax collection today stands at Rs 3 lakh crore or seven per cent of the GDP. Indians are paying their taxes like never before and this time around, the I-T department expects three crore people to file their returns a jump of 10 per cent from last year.

The question that was being debated on Face The Nation was - Are Indians coming to terms with paying income tax?

On the panel to discuss the issue were social activist Alyque Padamsee; tax consultant Subhash Lakhotia; and Hon Director, School of Convergence Paranjoy Guha Thakurta.

At the beginning of the discussion, 76 per cent people who voted in on the show said that Indians no longer evaded taxes, while 24 per cent said India had not yet come to terms with paying taxes.
How is it that India is suddenly seeing a rise in the number of people coming forward and paying their income tax? This is a trend that has never been seen before, so why has this happened suddenly? For the first time, direct tax collections are more than indirect tax collections.

Subhash Lakhotia said that these are not people who have come forward on their own. He said they came forward because salaries were good, income was great and so they were being called upon by the Government to pay taxes.

"It's not that one wants to pay income tax at a higher rate, but they are being made to do so because their salaries have gone up," he said.

"The inflation and the present income and the unprecedented growth in the salary structure is responsible for this high turnout for people wanting to pay taxes. This coupled with lower tax rates from the 1970s has brought people forward," he added.

He said it was a much easier process to file taxes now and that the new generation preferred to pay off their taxes and have an easier life.

However, Paranjoy Guha Thakurta was not convinced and said that the numbers told only a part of the truth.

"Six per cent of this country of over a billion people are income tax assesses. That is 60 million people. Of these, 30 million actually pay the tax, that is three per cent of the world's largest democracy pays taxes. Out of this, two out of three people don't have a choice because their salaries get deducted at source," he said.

He concurred with Lakhotia over the fact that it had become easier to pay taxes and that the system was more transparent, but said that it was important to put things in a certain perspective.

Thakurta said that farmers in Punjab who made lakhs cultivating strawberries and gherkins did not pay anything in taxes including the "gentlemen farmers" who had huge houses in big cities.

Subhash Lakhotia agreed saying that the Government should tax rich farmers so that the tax burden on the common man comes down some.

Cultural Change

There is a change in our culture and the way we behave these days. It has almost become a prestige issue to say that we pay our taxes.

Alyque Padamsee joined the debate at this point saying that that it was wonderful that so many people were paying taxes. However, he added, "What bothers me is where is the tax money going? Why don't we have accountability? After collection, the Government should announce to the public how it plans to utilise the taxes. Are we paying money for filthy hospitals and unmanned schools?"

He said that the younger generation which is paying taxes should demand to know where the tax money is going.

Thakurta jumped into the debate at this point saying that Mr Padamsee as a concerned citizen had every right to ask where his money was being used and that it does not disappear into that "big black hole called the consolidated fund of India".

 
 
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