Widen Tax Base, Do Away With Cess And Surcharges, Say Experts

Ahead of Union Budget 2023 which will be presented in February, experts have called for the widening of the tax base, doing away with cess and surcharge, improvement in compliance, and moderation in tax for emerging sectors. These are some of the important demands many experts have submitted to the finance ministry through an independent think tank Think Change Forum (TCF).

According to PTI, the Think Change Forum (TCF) told the ministry that experts are of the opinion that there is a need to grow tax revenues for the government to drive economic growth and make investments in developmental activities. Poor compliance is the weak link in achieving targeted collections leading to complex issues like overtaxing, complicated tax structures, rising litigation, among others.

In a pre-Budget discussion organised by the Think Change Forum, many analysts stressed on better compliance processes to be put in place backed by technological support to enable tax widening. They also said that there is a need for strategies to strengthen tax collections from Tier 2 cities and towns to widen the tax net.

Former chairman of the Central Board of Indirect Taxes and Customs (CBIC) P C Jha said, “Enforcement agencies are working hard to check the illicit trade, but tax evaders are ahead of curve and using innovative techniques to smuggle goods into our country. There is a need to deploy modern technology, install more scanners at ports and use artificial intelligence to address the counterfeiting issue.”

Former media adviser to former Prime Minister Manmohan Singh and advisor to the TCF Sanjay Baru said that a large section of individuals escapes and avoids taxes without being punished for it. He said, “In India only a small percentage pays taxes. If we compare our Tax GDP ratio with other rapidly developing economies it is below par. We also need to leverage technology to cast the net wider and increase compliance. Predictability in the taxation system is equally important to ensure compliance.”

Swapan Sarkar, owner of Sarkar and Associates, said, “This is paid by individuals as well as corporates on top of tax paid on earned income. This increases the total tax payout which can go as high as 42 per cent in the case of individuals as the surcharge on individual taxation is around 10 to 35 per cent.”