Our government is taking various steps to move the society to cashless economy as well as compliance of tax laws by them. Although it needs various reforms in various economic laws and the results cannot be achieved overnight, yet some change in Income Tax law for individuals and HUFs can turn the situation in favour of cashless economy, tax compliance and control of black money generation.
Therefore in my opinion following changes can have radical effect.
1. Tax rates for individuals and HUFs must be lower than tax rates fixed for firms, companies, cooperative societies etc. since individual do not maintain proper records, lower tax liability will encourage them to pay tax, file return and forget.
2. Income from properties, investments, loans & advances like rent, royalties, dividends, interest etc should be tax-free in the hands of individuals only. If such income is received without TDS then tax should be fixed equal to TDS applicable thereon. This will promote investment in securities of govt, post office, banks, shares of public companies where they will pay tax through TDS and other investments will suffer tax equal to TDS only.
3. All cash transactions by the companies, firms, cooperative societies, NGO, charitable trusts and political parties should be liable to tax at separate rate over and above the normal rate of tax applicable to them. In other words these persons will pay tax on their cash transactions undertaken above and over a threshold limit as well as % of their turnover. This will discourage the corporate bodies from cash transactions over a limit in the financial year.
4. All payments to govt, public sector undertakings etc should be received through cheque or online banking only. All banks can be authorized to install swipe machines to collect all public dues besides accepting cheques, bank transfer, debit advice, bank mandate etc from their account holders to process the deposit of govt dues & all public dues.
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