To promote the income tax compliance in the country, I would like to suggest one small thing if that can be done it would deter individual taxpayers for small tax evasion; especially by the small-time traders, shopkeepers or low to medium income group.
In general, individual among these groups are worried about the social security and try to do avoid taxes in the form of tax saving or tax evasion and on questioning they try to take shelter of ignorance or try to manage the situation with department officials.
These individuals have following questions when it comes to tax compliances:
What am I getting in return for paying higher taxes?
- Will the government do something for my family if am not there except for the government schooling and government hospitals?
- We can manage the situation with officials when it comes?
My suggestion is this situation can be resolved and the government has a chance to reverse the thought process of these individuals/households; if government introduce the concept of 'Tax Reward' in the form of 'Term Life Coverage' for these individuals.
This coverage would be equal to the direct tax payment (except penalties) by them in the last 15-20 years which is subject to upper limit of say 50 Lakh to 2 crore based on the tax payment slabs (classification is already done by the government in the form of Gold / Silver / other etc.)
Further this scheme can be optional and chargeable to the taxpayers while filing return so that there is no extra burden on the government; detailed note provision will be laid out on eligibility etc.. say regular in filing return & taxes; no concealment of the income in the last 5-10 years; not involved in illegal activities etc.
This term plan cost for the government bulk buying would be hardly 1000 to 3000 p.a. for the above sum.
Number of taxpayers at low and medium income group is huge and this suggestion can deter them to avoid the direct taxes.
After this these taxpayers will feel secured about their family in case of unfortunate event and would not like to evade small tax payment by concealing any income. Also, this will create the atmosphere to pay taxes since these can be returned in the form of social security later.
We hope you will find this interesting and may ask the team of experts to do some analysis on this towards implementation.
"Tax Rewards will lead to tax Reforms for small taxpayers"
CAclubindia
