Friday, June 01, 2007

Tax administration in India

A very nice account of what is wrong with the multitude of Tax departments of our country.
From that article,
>> Economists -- especially in India -- have been clamouring for an increase in the tax-to-GDP ratio for the past few years. Often they complain that India is not taxed 'adequately' and point out to our 'abysmal' tax-to-GDP ratio -- which stands approximately at 15-17% (all states of the Union included) -- and is far less than any developed country.

This is a very bad line of thinking. Very very flawed. Dont consider tax to GDP, consider the tax to per capita income ratio. What good is a high GDP, when the population is so high that the average individual is left with much less money, than what the numbers would tend to show.

What good will be a higher tax-to-GDP ratio when the entity is unable to pay the tax ?!!!
Also, I remember that you have to mention all your expenses for the financial year on the tax form. Ironically, the form is called Saral !!
Whats the purpose of such a hassle ? And who really reads all those expenses - Rs 65 for a beer, Rs 35 for Schezwan fried rice, Rs 500 for dining out, etc. The fact of the matter is that - You need 30% of my income, and I am giving you that. Thats it ! Baat Khatam ! How does it concern the numerous Tax departments about how I spend whatever is left with me. And why should I mention what phone I bought, where did I dine out, what credit card I use etc.
This is what we face regularly, year after year, while our "secular" government comes up with harebrained schemes for giving concessions to minorities.


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