When Union Finance Minister Arun Jaitely said in Parliament that we are a nation of tax non-compliant people, that was no news. After all, statistics have claimed, based on official, government of India figures that approximately seven people out of 100 pay income tax. All of us pay indirect taxes, levied on everything starting with petrol/diesel.
So, widening of the income-tax net, by bringing in people with annual incomes of Rs 2.5 lakh is welcome. Not because they will all pay tax but there is need to formalise their earnings. The annual Budget speech had many nuggets of information on how many people don’t pay tax, presumably because they are under the tax net yet buy cars, travel overseas… the usual goodies allegedly reserved for money earners.
The Budget has halved the income tax rate for those earning Rs 5 lakh annually and that should incentivise more people to declare that they earn some money, given some aspects of their lifestyles. Yes, the stress on funding, and that funding increase is huge, for the rural areas is likely to lead to some inflation but if it revives demand there, no one will complain too much.
The other unusual announcement was his effort to bring transparency into political funding. Now that is going to be a laugh, given how ingeniously people holding undisclosed cash in Rs 500 and Rs 1000 notes converted them. With the individual cap on political donations down to Rs 2,000 from Rs 20,000, politicians will now just have to find more people to comply with this law, when it comes. Cynicism, yes but that is our reality.
Everyone realises that leaving issues to be decided at the discretion of a babu is asking for trouble because then case by case becomes suitcase by suitcase. With the government claiming that they will use data mining tools, their own and contracted ones, that structure of discretionary powers should be dismantled. One Budget isn’t going to do it all; in fact, not just is the devil in the detail but also outcomes will depend on their implementation. We have laws galore but poor implementation. Let’s hope that the parts of this one that are going to help the economy don’t fall in that trap.
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