1. With GST on course, PM Narendra Modi must bring back DTC on the table

With GST on course, PM Narendra Modi must bring back DTC on the table

Linking of PAN with Aadhaar will make tax evasion extremely difficult, but with this, the government must also look at reducing the high income tax burden that leads to such practices.

By: | Published: June 30, 2017 7:00 PM
GST, GST launch, GST rollout, GST india, GST law, GST board, GST narendra modi, narendra modi, GST roll out, GST council, GST launch event, all about GST, goods and services tax The PAN-Aadhaar combination will deal with tax evasion in a big way, but there is also a need to bring down the income tax burden if this has to be tackled effectively. (PTI)

gst, gst launch, gst impact on indian economy, gst impact on economic growth, npa crisis, bad loan crisis, santosh tiwari, financial express first takeLinking of PAN with Aadhaar will make tax evasion extremely difficult, but with this, the government must also look at reducing the high income tax burden that leads to such practices.

Given this has come from one of the most seasoned politicians of his time, current president Pranab Mukherjee, all the political parties would do well by remembering his words about the Goods and Services Tax (GST), which will be a reality within the next few hours with the midnightlaunch by prime minister Narendra Modi in Parliament.

According to The Times of India, he said yesterday that ‘frivolous and opportunist’ coalitions at the Centre had stalled economic development by not allowing the introduction of GST for 30 years.

His statement is significant on two counts. One, President Pranab Mukherjee with all his experience feels that the coalition politics of opportunism is not conducive for big-bang economic reforms. Two, the current NDA government led by PM Modi may be better placed to go for major reforms in other areas also like labour law changes, foreign direct investment, and even land acquisition reforms, going ahead.

He is clearly hinting that the art of pushing economic reforms, which is crucial for political gains today, has the acumen to bring people together under one umbrella to support the proposed changes as an important ingredient—the number of critical Bills cleared in Parliament in the last two years, including GST and Aadhaar ones, bears testimony to this.

A party with a majority in the Lok Sabha, like the one that Bharatiya Janata Party (BJP) has currently, obviously, would be always in a better position to weave in the required support, even if it doesn’t have a majority in the Rajya Sabha.

So, while the GST is on course and remains a work in progress till it reaches the ultimate goal of moderate and minimum rates; besides reforms in other areas, PM Modi must now take the reform in the income tax domain to the next level by doing what is required the most to support moves like linking of PAN to Aadhaar.

The PAN-Aadhaar combination will deal with tax evasion in a big way, but there is also a need to bring down the income tax burden if this has to be tackled effectively.

The current structure in which the top rate of 30% kicks in at just Rs 10 lakh annual income must be changed on the lines proposed in the Direct Taxes Code (DTC) of 2009, which suggested the 30% rate to be made applicable at Rs 25 lakh income (with 10% up to Rs 10 lakh and 20% between Rs 10 lakh and Rs 25 lakh), along with the removal of all tax exemptions.

If the government is plugging all the loopholes that allowed tax evasion and avoidance, it must also simultaneously look at reducing the high tax burden which leads to such practices.

Resurrecting a discussion on the DTC will be a good idea in this context as the next big reform initiative in the taxation domain.

  1. S
    Simply Indian
    Jul 1, 2017 at 4:34 pm
    But why should govt. implement Direct Tax Code why not a simple 1 BTT (Bank transaction Tax), why we people prefer to get scope of manipulating books. if govt wants, a transaction limit of say 1 lakh p.a. can be exempt from the BTT.
    Reply

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