i Talk about Income Tax

Don't Push; Attract People To Pay Income Tax

Do you like to pay income tax? Most (if not all) of people don't!

Go to any country, and ask. People will say that if they have an option, they will never pay any income tax. Why? Because they consider it as an injustice and don't see any value doing so. People pay income tax because the government "push" them to do so. Still, people try to avoid paying taxes whenever they can.

Making strict laws to threaten people, is the ONLY way all the governments follow to push people paying the income tax.

Here I would like to present a different concept... Attract People To Pay Income Tax!

To do so, the Government Of India (GOI) should do following :-

Remove Injustice
Add Value

Remove Injustice

Let's consider, India is a family; Indians are family members; and the government is Parents (Mother and Father).

One family with family members - 3 brothers A, B, and C are living with their Parents. A and B earning good income; but C is barely earns something to meet monthly expenses. Parents take a cut from A's income to run the home. B and C are exempted to pay any money. Now how will A feel about this? He will be OK if C is not paying as C is not earning enough. But A will surely not like his Parents decision, to allow exemptions to B, who is also earning good money.

The same is happening in India. Here less than 4% people pay income tax and many people like "B" are enjoying exemptions. There are other factors too. Let's not talk more here as I have already suggested reforms, which will remove injustice and boost income tax compliance.

Add Value

How about if you get some benefit for paying income tax? If the government adds value in income tax payment, then people will start loving to pay their taxes. Here are 3 (three) ways to add value to income tax payment for attracting people.

Treat People with Dignity and Offer Free Help :-
Sometime People who pay income tax regularly, faces financial problems due to loss of business or loss of job. In such cases, people either pay less income tax or don't file a tax return at all. Most of the time income tax department sends threatening letter to these people asking for explanation. This should be STOP. Instead, send them a letter politely asking the reason for less tax return or not filing the tax return. Also offer free help to fix the problem, if possible.

The government should have a separate department for communicating, understanding and helping tax payers. This department can be very helpful to understand tax payers needs and problems. It can help better than talking with business tycoons as a pre-budget talk.
Offer Free Insurance :-
Let each and every person who pays income tax gets free insurance cover for everything like life, health, accident... even for 'Act of God'. There should NOT be any surcharge (extra tax/charges) for this. It should be linked with total income tax paid till the date. So the person who paid more income tax will get more insurance cover than the who paid less income tax. Non-filing of income tax returns shouldn't affect this.
Offer Free Retirement Benefit :-
This will be a little tough to implement. Still, the government may consider the possibility of offering free (without any surcharge) retirement benefit like pension for those who had paid income tax for at least 15 years (non consecutive years should be OK). Like insurance, the pension amount should be linked to total income tax paid. So the person who has paid more tax will get more pension than the who paid less tax.

If the GOI implemented the above suggestions, it will attract people to pay income tax honestly and regularly. Actually, they will start loving it!

[ Blog: i Talk about Income Tax ]

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