Who shall carry the burden of Non Tax Paying Indians?

I believe and argue that tax-rate-cut is more influenced by political will than actual motive of providing tax relief to honest tax payers. I shall in a few months myself be earning enough to be in the maximum tax range and still i see no reason for ministry to cut tax rates. What is the argument to cut tax rates? It seems that recent fiscal has seen more than expected tax collections and is set to exceed the next fiscal target as well; therefore lets have some tax reliefs for our honest tax payers as they deserve it and that should attract voluntary payments and historically in other countries it has been proved to increase the collection and tax paying citizens.

We deserve much more that. I do not mind paying 30% as long as it is used fairly for development and progress of India as a whole, but I have a big problem in carrying burden of non tax paying people. We are carrying the burden of 94% (only 6% people between the age group of 25-60 years pay their taxes) of non tax paying "citizens" of India. On that we are supposed to pay a surcharge of 10%, education cess of 3% and fringe benefit taxes (which by the way was introduced as a temporary measure and has become permanent). Nonsense! Agriculture sector, which comprises of 18% of India's GDP need not pay taxes. Why? I vehemently oppose the philosophy that farmers should not pay any taxes and get richer and richer. Anyways, that is another debate and might take another generation or two to come into act. For the time being, I shall focus on urban India.

Tax-GDP ration may increase from 11.4% to 12% against expected 11.8% in 2008. Good. Very Good. But are tax paying people increasing. We are seeking voluntary increase in tax collection. But does that mean every time we need to increase the number of tax payers, we shall decrease the tax rates? Tax Payment, by the way, should not be a voluntary activity, it should be a fundamental duty of every citizen. Today, there are so many professions that go unnoticed in the eyes of IT Dept and which are huge revenue earners such as private coaching/tuitions, yoga gurus, fitness centers/gyms stc. I do not understand how can government even contemplate such a decision without substantially widening the tax net. The tax rate cut will make sense only when there is a substantial coverage of taxes throughout India and we actually do not need that extra sent. For next decade or so, I don't see that happening!

Firstly, I ridicule the tax-collection target set by ministry of INR 2.5 lakh crore in a country where population exceeds INR 100 crore and only 6% of tax payers pay taxes. What is needed is not tax-rate cut but doing away with surcharges, education cess and fringe benefit taxes. That will not only help corporate and also non-corporate tax payers optimize their benefits, but also will refrain putting unnecessary burden on government's shoulders. We should aim at greater percentage of people paying taxes rather than quantum of tax payments. The tax rates as of now are fair enough but for other components that i mentioned above. We do not hesitate in comparing our rates with other developing economies and then we dream of becoming a developed economy before any of them.

I strongly recommend to strengthen our tax administration and tax compliance rather than introducing unnecessary measures like tax rate cuts, which is nothing but unhealthy for India as a whole. We should aim at eliminating tax revenue leakages and effective measures of tax settlements by adopting information technology. This is the time for India to grow and not celebrate such petty achievements. We ought to focus on our long term objectives.