Column : Tax administration, heal thyself
About R1 trillion is lost among those earning between R10 lakh and R20 lakh a year. Such individuals are in the top 2% of the population, and only a third of such individuals pay any tax.
The super-rich or those earning more than R20 lakh a year: There were 88 lakh such individuals and 58 lakh paid taxes, yielding a compliance rate of 66%. Missing taxes for this group, R0.46 trillion, or only 13% of the entire amount of PIT missing in India.
If compliance levels stay the same, a surcharge of 3% on super-rich incomes will yield about R2,600 crore. Alternatively, the government could make an effort, with support from its tax administration officials, to reduce corruption, reduce black money, and increase taxation among the top 7%. If compliance in this group was brought to only the average of the economy—i.e. 30%—that alone would generate an extra R35,000 crore, i.e. 5 million extra taxpayers, paying an average tax rate of only 10%, on average incomes of R7 lakh. Okay, if tax administration increased compliance by only 3 percentage points, from 10% to 13%
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