Budget 2023 tax expectations: Independent think tank Think Change Forum has suggested the government to focus on widening its tax base, doing away with cess and surcharges, improvement in compliance, and moderation in tax for emerging sectors ahead of the Budget scheduled to be tabled in the Parliament on February 1. The think tank believes that the government needs to shore up its tax revenues to drive economic growth and make investments in developmental activities.
Besides this, experts also identify poor compliance as a weak link in achieving targeted tax collections. This, in turn, leads to issues such as overtaxing, complicated tax structures, rising litigation, and more.
According to former PM Dr. Manmohan Singh’s media advisor Sanjaya Baru, only a small percentage of people pay taxes in India and we need to leverage technology to increase compliance.
Baru was quoted as saying by PTI: “In India only a small percentage pays taxes. If we compare our tax GDP ratio with other rapidly developing economies it is below par. We also need to leverage technology to cast the net wider and increase compliance. Predictability in the taxation system is equally important to ensure compliance.”
Former Central Board of Indirect Taxes and Customs chairman PC Jha said that modern technology and artificial intelligence need to be used to avoid counterfeiting. Jha noted: “Enforcement agencies are working hard to check the illicit trade, but tax evaders are ahead of curve and using innovative techniques to smuggle goods into our country. There is a need to deploy modern technology, install more scanners at ports and use artificial intelligence to address the counterfeiting issue.”
Going ahead, Sarkar and Associates Owner Swapan Sarkar said that the income tax in India has components such as surcharge and cess, which need to be done away with. He added that surcharge and cess need to be done away with as these lead to an overall increase in tax payout and disturb the federal structure.
He explained: “This is paid by individuals as well as corporates on top of tax paid on earned income. This increases the total tax payout which can go as high as 42 per cent in the case of individuals as the surcharge on individual taxation is around 10 per cent to 35 per cent.”
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