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This year budget was special in terms of vision, mission, theme, timing and intent. we have witnessed historic steps in 2016 which includes demonetisation, GST etc. The expectations were high on account of tax concessions as a reward for the pain of demonetization as suffered by the country, but the outcome was completely different.

Now I think its a time to celebrate on rationale behind this historic budget proposals, Let us first know some facts as follows :

Non Compliant Indians:
Tax Laws _ Direct tax collection is not commensurate with the income and consumption pattern of Indian economy.

As against estimated 4.2 crore persons engaged in organised sector employment, the number of individuals filing return for salary income are only 1.74 crore.  As against 5.6 crore informal sector individual enterprises and firms doing small business in India, the number of returns filed by this category are only 1.81 crore. Out of the 13.94 lakh companies registered in India upto 31st March, 2014, 5.97 lakh companies have filed their returns for Assessment Year 2016-17. Of the 5.97 lakh companies which have filed their returns for Assessment Year 2016-17 so far, as many as 2.76 lakh companies have shown losses or zero income. 2.85 lakh companies have shown profit before tax of less than Rs. 1 crore.  28,667 companies have shown profit between Rs. 1 crore to Rs. 10 crore, and only 7781 companies have profit before tax of more than Rs. 10 crores. 

Among the 3.7 crore individuals who filed the tax returns in 2015-16, 99 lakh show income below the exemption limit of Rs. 2.5 lakh p.a., 1.95 crore show income between Rs. 2.5 to Rs. 5 lakh, 52 lakh show income between Rs. 5 to Rs. 10 lakhs and only 24 lakh people show income above Rs. 10 lakhs.  Of the 76 lakh individual assesses who declare income above Rs. 5 lakh, 56 lakh are in the salaried class. The number of people showing income more than Rs. 50 lakh in the entire country is only 1.72 lakh. We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold, and number of Indian citizens who flew abroad, either for business or tourism, is 2 crore in the year 2015. 

From all these figures we can conclude that we are largely a tax non-compliant society. The predominance of cash in the economy makes it possible for the people to evade their taxes.  When too many people evade taxes, the burden of their share falls on those who are honest and compliant.

Demonetisation: Not in Vain: After the demonetization, the preliminary analysis of data received in respect of deposits made by people in old currency presents a revealing picture.  During the period 8th November to 30th December 2016, deposits between Rs. 2 lakh and Rs. 80 lakh were made in about 1.09 crore accounts with an average deposit size of Rs. 5.03 lakh.  Deposits of more than 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs. 3.31 crores. 

This data mining will help the government, immensely in expanding the tax net as well as increasing the revenues, which was one of the objectives of demonetization.

Priority of BJP Government: Clean India use clean money: The government intends to eliminate the black money component from the economy, commitment to make taxation rates more reasonable, tax administration more fair and expanding the tax base in the country.  

This approach will change the colour of money. From Black to white yes

So the thrust of government's tax proposals in this Budget is stimulating growth, relief to middle class, affordable housing, curbing black money, promoting digital economy, transparency of political funding and simplification of tax administration.

Now Read the above Budget Highlights once again, in line with these objectives and commitment, you will surely conclude that this government is firmly believe in improving the income distribution system, improving existing infrastructure, enhancing the quality of life of Indians and what our PMO says "We are fighting every election on one agenda i.e. Vikas. Growth !!

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(Tax Professional)
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