Better Tax Compliance

The latest figures put forth by the Tax Department would surely offer some vindication to the NDA government at the Centre about the Prime Minister’s cash ban move two years back. More than 1.4 lakh taxpayers declared income of more than Rs 1 crore in their tax returns for the 2016-17 fiscal, a rise of over 60 per cent from 2013-14. Of these, individual taxpayers reporting income of over Rs 1 crore increased by 68 per cent to 81,344 in these three years. Overall, till 2016-17, the gross total income declared was Rs 44.99 lakh crore, an increase of more than 67 per cent. There has been a growth of more than 80 per cent in the number of tax returns filed in the last four fiscals. So the country now has more ‘crorepati’ taxpayers and a tax system equipped with better technology to check tax evasion. The government has attributed improved tax compliance to demonetization in November-December 2016 and stricter laws to tackle undeclared income, as well as the introduction of Goods and Services Tax (GST) in July last year. Improving tax compliance is good, but can the government muster enough political will to widen the tax base with measures like taxing rich farmers? Lest we forget, only about 4.5 percent of the population pays income tax.