Supratik wrote:You are thinking of salaried class only and that too very urban ones. Typically most Indian wives don't work. Even if 30% of urban women earn a salary the numbers are pretty high. Remember agricultural middle classes are not taxed. I think "most" will be now covered.
This has nothing to do with the salaried class. Salary by definition has to be entirely paid to the employee. Business/rental/interest income is the category which is often split across 2 returns (obviously by apportioning the properties/interest bearing accounts/business partnerships as the case may be to both spouses) so a lower tax bracket is hit, or other tax advantages can be had like tax exempt bonds etc.
Yagnasri wrote:Most of the IT payers are Salaried class or others who receive their income on account and not in cash. Most of the economy still runs on cash and there is huge tax base yet to be tapped. GST formalized most of the trading activities which creates a data that can be mined to look at trader income. Professional class like Doctors don't pay tax most of the time.
Businessmen, doctors, lawyers, actors and other professionals do pay income tax, often quite a lot, but have various means (legal and not-so-legal) at their disposal to minimize their declared income. This is a luxury the salaried class doesn't which is why they are treated with "kid gloves" by the taxation authorities.
IT officers weren't born yesterday. They have a very good idea of what kind of income doctors, CAs and other people make; and they have the means and motivation to go after large-scale fraud.
"Most of the economy still runs on cash" yes, and so be it. The very act of tax collection costs money. It makes no sense to spend 50p for every rupee of tax collected, because - guess what - the other party is also spending 50p to maintain records, in addition to the rupee of tax they are paying. You go after organized sector, the big fish, and let the small ones operate in the margins or with a simplified tax regime. The GST choice provided to restaurants - either 5% of the bill, or 12% of the profit minus costs (numbers may be incorrect) - is an example where there is a much simpler record keeping option provided to let the vast majority of small operators come under the tax umbrella with relatively less pain.
And at this stage in our development, it's best to let daily wage labour, vendors, small farmers and tradespeople off the hook. As their salaries improve, we should consider bringing them into the tax net - as they did with taxi drivers some years ago.