How many times have we demanded our government to step up, intervene, spend, invest in a lot of issues we face daily. We have forgotten our government’s capabilities are limited to the money we pay to our government. The recent studies shows only one percent of India’s population pay tax. Such reports have been disclosed by the government for the assessment of the financial year 2012-13. A total of 2.87 crore individuals had filed their income tax returns for that year, which is less than 4 percent of the 760 million adults counted in 2011 census. 1.62 crore people out of this 2.87 crore did not pay any tax, leaving the number of taxpayers at just about 1.25 crore which was close to one percent of the country’s total population of about 123 crores at that time.
Taxes are primarily of two types:
Direct Taxes, as the name suggests, are taxes that are directly paid to the government by the taxpayer. It is a tax applied to individuals and organizations directly by the government e.g. income tax, corporation tax, wealth tax etc.
Indirect Taxes are applied to the manufacture or sale of goods and services. These are initially paid to the government by an intermediary, who then adds the amount of the tax paid to the value of the goods / services and passes on the total amount to the end user. Examples of these are sales tax, service tax, excise duty etc.
Due to the failure in bringing enough well-off Indians into the direct tax net, the country has been mobilising revenue through indirect tax collection. In 2015-16, direct taxes contributed only 51 per cent. What India needs is to broaden its tax base. India has only 15.5 per cent share of tax in its GDP. Whereas the leading countries have a much higher tax base, like in Italy the share is 28.7 per cent, in the UK it is 28.5 per cent, South Africa has 26.5 percent of tax in its share of GDP.
The Logical Indian requests the entire community to pay their tax. Our fight and dream for change start with us. The more people pay their taxes duly will naturally boost government’s capabilities to implement new initiatives and policies.