Should Direct Tax or Income Tax Act be abolished?
The Income Tax Act should be abolished. Direct taxes should no longer be imposed. Discuss the pros and cons of these suggestions.
There has been a lot of debate and suggestions from various quarters that since GST has been implemented and Government is mopping up a lot of revenue, so the Direct Tax i.e. Income Tax Act should be abolished.
Many are proposing 'One Nation One Tax' theory, but I would like to put out some figures and let the members decide as what should be done and those asking for abolishing the Iccome Tax Act should reconsider their thoughts based on facts.
As per the annual data published by the Income Tax Department for the FY 2018-19, which I had read I am putting out some figures here:
Total tax comprises of Direct Tax and Indirect Tax collection. (Income Tax + GST)
Percentage of direct tax contribution to total tax is 54.78% for the Financial Year 2018-19. It has been over 50% since Financial Year 2007-08.
The direct taxpayers include individuals as well as companies and other persons. I will discuss about individuals only.
We are a country of roughly 130 crore people and out of which only 8,04,45,511 are taxpayers.
Out of the 8 crores, only 5,95,44,767 individuals file return. Now if we do simple calculation we can see that only 6.15% of people are taxpayers and only 4.16% are tax return filers.
Now, if such a small percentage of people are making a contribution of over 50% to the total tax, then imagine the tax collection and contribution that can be made if the number of tax payers increase. Even a single percent increase will make a huge difference to the exchequer of the Central Government.
This tax is collected by Central Government only and State Government tax data is not here. State Government also collects a lot of local taxes which doesn't go to the Central Government.
What do members have to say about abolishing Direct Tax or Income Tax Act? Will it be a good thing to do or a disaster?