Lack of tax compliance leads to tax evasion

The sad reality of Indian tax situation is the low number of tax payers in the country. The figures are as low as 3 to 5 percent leading to a staggering amount of fiscal deficit. The numbers shed light on the reality that recovering domestic tax money is more important than chasing black money. There are only 11 lakh people with annual income of 10 lakhs according to government data, practically very low figure. Maharashtra and Delhi alone contribute to half the tax amount paid in the country. The reality here is that there are Indians who can afford expensive life but are not willing to pay taxes. This has led to the position where the government has to borrow money to run the country.

The government is trying to increase the tax amount by burdening the already burdened salaried class. The government is trying to expand the base of tax payers. To achieve this government has to bring in stringent compliance rules and the state monitoring has to increase.The government believes (Goods and services tax) GST will bring in the much needed change. GST is a way of unifying all the taxes and increase transparency in the system. The state is also increasing the requirement of PAN in high valued transactions to track flow of money. Recently efforts were taken to eliminate false PAN numbers to prevent people using multiple Ids to hide transactions. The GST bill is awaiting clearance in Rajya Sabha and once cleared will bring positive results in the Indian taxation system.

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