- For implementing any law in India, the Government receives massive feedback and suggestion from all sectors and stakeholders.
- Once the law is drafted, it has to undergo various amendments due to errors, changes in business scenarios, and challenges faced in adopting such provisions.
- In this article, we will learn about the techniques involved to increase the tax revenue by the Government in a diligent and transparent manner.
Techniques/Methods for the Collection of tax fairly
- Reduction in the GST Tariff rates
- In comparison with other Countries, India levies more taxes on Income, immovable property, goods, and services that are around 43% of the total income.
- In a country where a small percentage of the population is paying taxes, the burden of taxes on taxpayers is generally very high.
- However, it was assumed that GST rates will be reduced but it is taking a long time than expecting.
- When higher rates are imposed, it induces the taxpayer to develop tax evasion schemes or other unlawful activities to avoid paying tax as the burden is high.
- Adopting of Single tax rate
- This approach is adopted by many developed countries. When multiple rates are applicable it gives rise to Court litigation as it is a tendency of the taxpayer to take lower rates rather than higher.
- To restrict such practices, the Government should design a single rate for goods and services.
- If the case Government wants to collect more tax on the consumption of luxury goods, so the Regulatory authority can make a schedule to the extent and impose higher rates only on luxury goods.
- Eliminating the approach of exemptions
- Keeping in mind India’s federal tax structure and diverse culture and economic societal gap exemption is taxation laws has been an active issue.
- Exemptions are likely to be compliant with the Constitutional provisions like education, mandatory functions, exercising of fundamental rights.
- Exemptions are also considered as a backbone for many sectors such as agriculture and floriculture.
- On the other hand, while talking about problems that arise in the exemption, it will be difficult to classify taxable supplies and the streaming effect of taxes.
- As there are plenty of cases pending in Court, so eliminating exemption will also increase a lot of litigation for the Court on the conflicts that arise amongst the taxpayers.
- Hike in the pay level of Inspectors and Superintendents
- Recently, much Governmental staff is collaborating with tax consultants and other tax professionals that gives rise to incorrectly closing the identified issues and curtails the collection of tax.
- Therefore, the Government shall adopt a proper pay mechanism and implementing a strict verification process with assured punishment for those who get involved.
- Furthermore, appropriate training shall be given on moral values and on the provisions of the Constitution.
- Extending to the rural parts of India
- The people living in the remote areas of the country are also involved in trading and manufacturing nowadays.
- Although those people are not registered under law neither they are required to be
- So in order to avoid this, the Government should organize awareness programs and if necessary shall also conduct search and seizure operations.
- Accountability and more transparency
- In private and as well as in the public sector, self-discipline, accountability, and responsibility for every action play an important role.
- While talking about the Government department, these traits are scarcely adopted and visible.
- Lack of Punctuality and corruption is the main reason behind failing of Government establishments.
- There are many examples of tax defaulters that have faced many humiliations with the department for choosing the way of tax evasion.
- Points that shall be abide by the Taxpayers
- The taxpayer is expected to uphold and respect the laws of the land.
- An honest taxpayer shall voluntarily discharge all tax liabilities and furnish information
- He should also fulfill their duties and legal obligations on time
- A wise taxpayer shall avoid unnecessary litigation.
Conclusion
The Government is constantly working to build the tax system transparent for the tax payer. The practical implementation shall be difficult as per now but definitely be achievable in the long run. The vision is to build India’s socio-economic growth by formulating and emphasizing progressive indirect tax policies adopting stakeholder-oriented approach while protecting the tax system.