oppn parties Tax Time Must Not Be Taxing Time

News Snippets

  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
  • India has moved to the 40th spot in the innovation index, up 6 spots from last year
  • DGGI has alleged that top insurance companies, banks and NBFCs has committed a fraud of Rs 800cr by claiming input tax credit without underlying supplies
  • The Centre will borrow Rs 10000cr less than planned earlier due to good revenue collections
  • At $23.9bn, India's current account deficit widened to 2.8% in Q1, the worst in four years
  • Stocks continue to flounder on Thursday: Sensex sheds 188 points to 56409 and Nifty 40 points to 16818
  • The 36th National Games were declared open on Thusrday by PM Modi in front of a record crowd in Motera near Ahmedabad
  • Jasprit Bumrah most likely to miss T20 World Cup due to recurrence of back injury
  • PFI's political wing, the SDPI is on EC radar and action will follow soon if discrepancies are detected
  • Ashok Gehlot to meet Sonia Gandhi today, says all issues will be sorted out soon
  • Referring to the PFI ban, most Muslim organizations ask the government to take similar action against right wings organizations like the RSS, Bajrang Dal, VHP and the like
In a landmark order, Supreme Court rules that all women, married or unmarried, are entitled to safe and legal abortion up to 24 weeks of pregnancy as per the MTP Act
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Tax Time Must Not Be Taxing Time

By Sunil Garodia
First publised on 2021-09-13 07:05:04

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

The Supreme Court is spot on in saying that a tax regime must be well-defined and certain with no room for presumption to ensure compliance, maximization of revenue and minimization of litigation. The court said that "it needs to be observed here that in the taxation regime, there is no room for presumption and nothing can be taken to be implied. The tax an individual or a corporate is required to pay is a matter of planning for the taxpayer and the Government should endevour to keep it convenient and simple to achieve maximization of compliance." India ranks 37th out of 57 countries in the Tax Complexity Index.

In India, the problem is that even though the government is committed to tax reforms and there have been major reforms from the nineties onwards, the plethora of exemptions and deductions create a system that is complex, open to different interpretations and leads to litigation. Further, tax officials are given to take arbitrary decisions when allowing or disallowing these exemptions and deductions in various cases and nothing is certain due to the complex nature of the tax laws.

To make the laws simple, it is necessary to do away with all such deductions and exemptions. To compensate the taxpayer, the threshold for tax free income should be increased. The only problem in this changed system will be that savings will not be channelized in certain specified instruments like life insurance, public provident fund etc. which are attractive avenues for savings mainly because they provide tax breaks. But one thing is sure: doing away with exemptions and deductions will reduce complexity and ensure better compliance as well as reduce litigation.

As of now, the tax payer and the tax department are pitted as adversaries. This has to change. But this can only change, as the Supreme Court has rightly said, when the tax laws are simple and certain, leaving no room for presumption. The onus is upon the government to design laws that tax incomes in such a way that the taxpayer does not feel threatened and the tax officials do not treat them as cheats and fraudsters out to deprive the sarkar of its rightful revenue.