Chief Economic Advisor Arvind Subramanian has argued against abolishing income tax. Speaking at a CNBC-TV18 event Friday, Subramanian said the government should look at a carefully balanced set of carrots and sticks to expand the tax base and deter tax evasion and promote voluntary tax payments.
The number of tax payers to voters in India is very low at only about 5-6 percent, Subramanian said noting India’s turnout rate in elections is much higher than turnout in paying taxes.
There are around 53-54 million tax payers in India today and only about 2.4 million people declare income of more than Rs 10 lakh.
He believes to induce self-compliance on tax payments, it is critical to focus on a combination of enforcements and reassurance that the funds collected will be utilised aptly.
In this context, he said, the most exciting development is the implementation of the Goods and Services Tax (GST) as under it tax compliance becomes self-enforcing.
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