Transparent Taxation – Honouring the Honest: An Introspection
We need to give serious thought to the platform of ‘Transparent Taxation – Honouring the Honest‘ for easier tax compliance launched by the Indian Prime Minister Narendra Modi on 13th August 2020.
It is believed that income becomes ‘satvik ‘(righteous) after paying the taxes which are expected to be utilized for public wellbeing. Ethical means are required to be adopted for earning income. Although the adage ‘ends justify the means‘ is used by some who do charity after looting people through various unethical means.
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The platform lays down the framework for the series of reforms including faceless assessment, faceless appeal, and the moral character of the taxpayer by focusing on providing a transparent and tax-friendly regime with trust between taxpayers and the Income Tax Department.
To undertake public wellbeing and do altruism, the corporate people are expected to spend only 02 percent of the average net profit (with a rider of Rs 5 crore or more profit in the past three years) under the corporate social responsibility(CSR) vide amended Companies Act 2013. It is pertinent to mention that the entire business community has to learn CSR from Maharaja Agrasen who was a strong advocate of spending 25 percent of the incomes on the welfare of living beings in society. He also made a case for 25 percent savings for the future which is necessary and sufficient condition for coping up the financial crisis of any kind as in present times when the quality of life is becoming expensive with inflation. The wealth creators are expected to follow the “Trusteeship Model” of Mahatma Gandhi.
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To make the income tax system efficient, transparent, accountable, seamless, and painless, digital India calls for all the financial transactions online for reducing if not removing the amount of black money in the economy.
To ensure ease of compliance and improve the quality of assessment and expeditious decisions, the faceless assessment system will prove to be a milestone in building trust and broaden tax base.
Certainly, the honest taxpayers deserved honour more than just appreciation with lip-service. The rational behaviour of the taxpayers and the tax officials is the need of the hour through taxpayers’ charter’.
To reduce the hardships for the taxpayers, the faceless assessment will ensure voluntary tax compliance, reduced tax litigation with an enhanced tax base. The harassment-free process of assessment for honest taxpayers was long-awaited for the conducive tax environment.
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The reduced number of tax scrutiny cases from 0.94 percent earlier to 0.26 percent now reveals the declining trend of the coefficient of distrust under ‘Vivad Se Vishwas Scheme‘. But, sadly, only 1.5 crore people pay taxes in the overpopulated nation of more than 136 crores.
The claim of the widening and deepening of the tax base appears to be doubtful as the income tax of the MLAs and MPs are still paid from the public exchequer. It gives heart burning to the pensioners like me whose pension is taxable whereas the pension of the politicians with tags of former MLAs and MPs is not taxed. I believe the pension of anyone is not an income but the social security for the work done in the past. There is no logic and rationale for taxing the pensioners in a country like India where there is no income tax on the former MLAs and MPs.
The facilitative tax payment system will motivate the Indians including MLAs and MPs to become tax payers and enhance tax GDP ratio.
The income on which we pay tax is net income to be called satvik (righteous) income earned with honest efforts, to be treated good (Shubh Labh) for the self and the others around in the society. The pain of paying income tax is to be treated as pleasure because the contribution is made towards the nation for public wellbeing.
The intellectual wealth has emerged successful in making new billionaires’ who use artificial intelligence in the financial markets in the global knowledge economy of today. Intellectual wealth is superior to physical wealth which cannot be stolen.
To convert the crisis of inequality caused by COVID into an opportunity, let these top billionaires with increased capacity and capability to donate and fulfill the obligation of corporate social responsibility (CSR) as Maharaja Agrasen used to do by spending 25 percent for the upliftment of the weaker segments of the Indian society. They should use the wisdom of trusteeship advocated by Mahatma Gandhi followed by Bill Gates which is necessary and sufficient to prove long-term policy actions and not ‘the Robin Hood-type’ solutions. Let the art of giving supplement the art of living in a society with built-in inequalities like social, economic, educational, health, and gender.
We certainly have to create wealth (physical, financial, and human) through Accountability, Transparency, Morality (ATM) which is more relevant than the ATM of any Indian bank. This falls in the domain of needonomics, which is ethical, nonviolent, as well as spiritual in nature.
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The honest taxpayers deserve more than appreciation, some privileges including priorities in travel by air and first-class AC in trains.
To move forward with such practical solutions, we have to do research with policy implications for honest taxpayers. The hidden loopholes in the Income Tax Act deserve to be identified and monitored by the stakeholders. To fix problems of the Indian economy, we need practical solutions and avoid war of words and blame game.
Disclaimer: The views expressed in this article are of the author solely. TheRise.co.in neither endorses nor is responsible for them.
About the author
Prof. M. M. Goel is former Vice-Chancellor of JNU Jaipur. He is also known as ‘Needonomist’ (economist for needs) among the fraternity of economists in India.
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