Economic Survey 2015-16 was tabled in the Parliament on Friday, which proposed widening tax net from 5.5 per cent of earning individuals to over 20 per cent.
Economic Survey 2015-16 was tabled in the Parliament on Friday, which proposed widening tax net from 5.5 per cent of earning individuals to over 20 per cent. While widening the tax net, government hopes to reasonably tax better-off individuals with income from real estate and agriculture, hinting at gradually phasing out of tax exemption Raj.
The Economic Survey termed the proposed Goods and Services Tax (GST) as a reforms measure, which will be implemented by the Centre, 28 States and 7 Union Territories. It also added GST would impact dramatic changes in the Indian tax system and will affect between 2-2.5 million excise and service tax payers.
“Despite the number of tax returns filed picking up from mid-1980 onwards, nearly 85 per cent of the economy remains outside the tax net. Pointing out that just 5.5 per cent of earning individuals are in the tax net, translating to a ratio of about 4 per cent of tax payers to voters, the Survey says this ratio should be raised to a desirable estimate of about 23 per cent, ” the survey stated.
The survey suggested in its efforts to widen the tax base the exemption thresholds should not be raised as it has been increased much more rapidly than underlying income growth resulting in a widening of the wedge between average income and threshold limit. Economic Survety 2015-16 however indicated that property taxation as an area that should get urgent attention, which if periodicaly updated will improve local government finances, discourage speculation in real estate sector and pave the way for Smart Cities.
The Survey reiterated to bring down corporate Taxes from 30 per cent to 25 per cent while proposing the phasing out of exemptions in an orderly manner.