While tax collections have more than doubled between FY09 and FY15, the number of taxpayers has hardly grown. There is a huge potential to expand the taxpayer base as only 3.6 crore people file income tax returns despite over 17 crore having permanent account number (PAN). Linking PAN with Aadhaar is a key tax reform which will help in curbing tax evasion and black money. From this year, the Income-Tax Department has started linking Aadhaar numbers to PAN through e-filing of tax returns. Already 35,23,702 returns are PAN-Aadhaar linked. This needs to be extended further. Moreover, the finance minister has announced in a Facebook post that the government is planning to link PAN with high-value cash transactions to combat black money and rationalise the tax structure.
Besides reduction in corporate tax rate to 25% from 30% over the next four years and introduction of GST, going forward, the government is expected to restructure the personal income tax slabs. With the top tax bracket of 30% kicking in at Rs 10 lakh, many in the middle-income brackets tend to depress their income statements to remain in the lower tax slab. The Direct Taxes Code Bill, 2009 had proposed that 30% tax rate should be for income above Rs 25 lakh and the Standing Committee had proposed it to be for income above Rs 20 lakh.
