India is largely tax non-compliant society: FM

In last 5 yrs, over 1.25 cr cars have been sold

India is largely tax non-compliant society: FM

Finance Minister Arun Jaitley on Wednesday said that Indian society was largely tax non-compliant and predominance of cash in economy made it possible for people to evade taxes.

While presenting the Union Budget for 2017-18 financial year before Parliament, Jaitley said “When too many people evade taxes, the burden of their share falls on those who are honest and compliant.”

Jaitley cited Income Tax data to drive home the point that a majority of Indians tend to evade taxes.

He pointed out that among the 3.7 crore individuals, who filed the tax returns in 2015-16, 99 lakh showed income below the exemption limit of Rs 2.5 lakh per annum; 1.95 crore showed income between Rs 2.5 lakh and Rs 5 lakh per annum, 52 lakh showed income between Rs 5 lakh and Rs 10 lakh per annum and only 24 lakh people showed annual income above Rs 10 lakh. Of the 76 lakh individual assesses, who declared income above Rs 5 lakh, 56 lakh were in the salaried class.

The number of people showing income more than Rs 50 lakh in the entire country was only 1.72 lakh.

“We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold, and the number of Indian citizens who flew abroad, either for business or tourism, is 2 crore in the year 2015. From all these figures we can conclude that we are largely a tax non-compliant society,” said Jaitley.

Finance Minister also noted that “preliminary analysis” of deposits made by people in demonetised currency notes of Rs 500 and Rs 1,000 denominations since November 8 presented “a revealing picture”.

During the period November 8 to December 30, deposits between Rs 2 lakh and Rs 80 lakh were made in about 1.09 crore accounts with an average deposit size of Rs 5.03 lakh.

Average deposit sizeDeposits of more than Rs 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs 3.31 crore.

“This data mining will help us immensely in expanding the tax net as well as increasing the revenues, which was one of the objectives of demonetisation,” said the finance minister.

He said that one of the “main priorities of our government” was to eliminate “the black money component” from the economy.

“We are committed to make our taxation rates more reasonable, our tax administration more fair and expand the tax base in the country. This approach will change the colour of money,” said Jaitley. 

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