Thoughts On Tax Reforms In India

Here are some thoughts from my friend Ram Murthy...


Let me begin by saying that i could not think of an apt title for whatever I am trying to write. This is Tax Season and people around you and you yourslef might might be wondering where to file , when to file and how much you can get back .
Raising the same issue with my colleague at my Office ( during afternoon lunch ) the discussion centered around :
" The Usage of Credit/ Debit Cards by People in India: Benficial or not for both the Government and Public"

Well my thought was that, if every Individual who owned a card tries to purchase all of his or her day to day needs with a Credit / Debit card , then the Store will have that transaction recorded and certainly the store is ought to pay TAX according to the business it has done.
Keeping by brother back home in view (A guy who earns decently), there is a sizable amount of middle Class population who are now doing Transactions through Card.
If every transaction you make is not in terms of Cash (Rupees), then may be that will enforce all the retail stores to pay the amount due to the government.
This is just perhaps one of the areas, even though there might be lot of other Business who try to avoid in every possible way they can.
So what Section of People pay and what do not?
To the best of my knowledge
1. All the Public Sector and State Government Employs Pay Tax. (Automatically govt. deducts from payroll)
2. All the Private Sector employs (It Companies, Corporates like Reliance, Birla, and Wipro )
3. Industrialists : Small Scale, medium and large scale
4. To further classify - retail stores ( Shops) , Small Shops , etc ..
Who Do not :
1. I do not know but there is lot here.......
Amazingly all this Put together is around 30% of population.
When I Googled about what percentage of India pays Tax, I was perplexed to find the number to be just 2 %.
Being a Predominantly Agricultural based Country, India's Income Still largely is from Cultivation. (70 % is here)
While the recent IT boom has brought in good amount of Foreign reserves, imagine how much the government would get if at least 10 % Population paid taxes and stayed clean.
So my fellow Indians Please Provide your inputs on
1. What can be done to bring Transparency in Tax - filing?
2. How to enlighten People about its importance?
3. Finally what can be done to increase Tax Fund?
More money the govt. has, greater the degree of freedom in utilizing it effectively.
Lastly: i just read that there is an e- filing facility in India too.
I tried my best to write professionally but I am not sure if it was sucessfull.