FINANCE Minister Arun Jaitley has promised a friendly tax regime which should improve compliance and minimise evation. India has only 4 crore tax payers and total tax collection here add upto only a little over 10% of GDP. An expert committee headed by Justice R. V. Easwar which has tried to simplify tax laws and ensure predictability in the demands of taxmen as taken steps in the right direction. Tax deductible at source (TDS) accounts for 65% of personal income tax collections. The lowering of the TDS threshold from 10%-5% should be welcome. The committee has made other constructive suggestions-amendment of capital gains tax to provide relief to retail investors, simplification of the distinction between capital gains and business income, expediting tax refunds, a presumptive income scheme for professionals, electronic filing of tax returns to facilitate compliance, etc. But tax on provident fund accumulations will hurt individual tax payers.
Implementation of the suggestions should benefit smaller tax payers and the emerging band of professionals. In view of the endless litigation between tax payers and tax authorities, the threshold of 5% should be helpful in clearing the air. It may not however apply to the presumptive schemes for professionals. More reforms are needed in future. Clear guidelines would be layed down to lower corporate tax in the next 4 years. Steps should be taken to make for better analysis of tax data to widen the net. Finally, the passing of the goods and services tax (GST) should give the tax machinery a new breath of life. But however streamlined the tax procedures are, evasion is unavoidable. There are so many Mundhras lurking about.