oppn parties Tax Time Must Not Be Taxing Time

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  • T20 WC: USA enter Super Eights as their last match against Ireland gets washed out. They were ahead of Pakistan in the points tally. Pakistan were eliminated
  • T20 WC: USA enter Super Eights as their last match against Ireland gets washed out. They were ahead of Pakistan in the points tally. Pakistan were eliminated
  • BJD leader and former Odisha CM Naveen Patnaik said that the criticism of his aide V K Pandian is "regrettable"
  • As more than 20 BJP ministers lost in the recent elections, the new Union cabinet will have many new faces from the party
  • Congress Working committee asks Rahul Gandhi to take up the position of Leader of Opposition in Lok Sabha. Gandhi says he will consider the request
  • RBI governor Shaktikanta Das said that gold was shifted to India as the quantum of RBI gold abroad had increased due to recent purchases
  • Delhi HC rules that submitting photographic evidence of adultery will not be enough, they will have to be proved as authentic in the age of deepfakes
  • A four-member panel will review NEET-UG results of 1563 candidates to check if they were given extra marks for exam time loss
  • Mamata Banerjee says her party will not join Modi's oath-taking ceremony. Also says INDIA bloc might stake claim to form government later
  • K C Tyagi of the JD(U) dropped a bombshell when he said that Nitish Kumar was offered the post of prime minister for switching sides. Opposition leaders rubbished the claim
  • This May was India's hottest month in 36 years says IMD
  • T20 WC: India take on Pakistan today. Telecast to begin at 8pm IST
  • T20 WC: Afghanistan stun New Zealand and Bangladesh win against Sri Lanka
  • T20 World Cup: Australia beat England by 36 runs. This spoils England's chances of making the playoffs as they have lost both their matches till now
  • Heat wave continues in the country as monsoon moves slow
G7 commits to promote India-Europe corridor
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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.