A high-level panel set up to review tax laws has suggested a slew of significant changes including bringing large farmers in the tax net, re-introduction of fringe benefit and banking cash transaction taxes, separate cell for high-networth individuals (HNIs) and discouraging cash transaction among other things.
The tax administrative reforms commission (TARC), headed by Parthasarathi Shome, in its third report released on Tuesday, suggested that in order to widen the tax base that has remained largely static, “large farmers should be brought into the tax net. Against a tax free limit of Rs 5 lakh on agricultural income, farmers having income above much higher threshold income, such as Rs 50 lakh, could be taxed.”
The commission said that while small traders should be encouraged to use debit cards extensively, measures should be put in place to discourage cash transactions. The TARC also made a case for increasing the wealth tax base by including intangible financial assets while raising the threshold and decreasing the wealth tax rate.