Honest taxpayer pays up, Govt makes merry

TAXED AND NOT COMPLANING: Taxpayers queue up at a camp to file returns.

    

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Keywords: Indirect Taxes , Direct Taxes

New Delhi: The honest taxpayer has made the Government rich. The Centre’s direct tax collections may surpass indirect tax collections for the first time ever.

The Government’s direct tax collections grew by 42.5 per cent last year and in 2008 it is expected to earn more. The numbers are impressive, as just 6 per cent of India’s working population—roughly about three crore people—pay taxes. Of that only 5.62 lakh file returns showing incomes above Rs 10 lakh.

That doesn’t mean all other Indians are too poor to pay taxes. The 2005 ACNielsen Shopper Trends survey says that the average monthly expenditure of Indians has been growing by a robust 14 per cent every year.

This means that the largest burden of personal income tax falls on salaried earners and on those few self-employed people who honestly declare taxable income.

Thus the demand for reduction in direct tax rates by taxpayers seems justifiable. But with agriculture, which comprises 18 per cent of India's GDP paying no taxes, it seems that the plea for rate cut is not practical.

Income Tax department officials say more than 3 crore people file their I-T returns this year compared to 2.5 crore in 200. E-filing of returns has also picked up. Last year only 1.6 lakh e-returns were received but this year the number is expected to cross the 13-lakh mark.