Budget 2023 Tax Expectations: Independent think tank Think Change Forum has suggested that the government focus on widening its tax base, doing away with cess and surcharges, improving compliance and reducing tax for emerging sectors ahead of the Budget 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 invest in developmental activities.
Experts believe that poor compliance is a weak link in achieving targeted tax collections. This 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 less than par. We need to leverage technology to make the net wider and increase compliance. Predictability is important to ensure compliance in the taxation system. The former Central Board of Indirect Taxes and Customs Chairman PC Jha said modern technology and artificial intelligence needed to be used to avoid counterfeiting. Enforcement agencies are hard at work to check the illegal trade, but tax evaders are ahead of the 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. According to Sarkar and Associates Owner Swapan Sarkar, the income tax in India has components such as surcharge and cess that need to be done away with. He said surcharge and cess need to be done away with as they lead to an increase in tax payout and disturb the federal structure.
He explained that the tax paid on earned income is paid by individuals as well as corporations. The surcharge on individual taxation can go up from 10 per cent to 35 per cent in the case of individuals, as the total tax payout can go up as high as 42 per cent. 56 lakh crore in January, the second highest ever for a single person, was 56 lakh crore in January.