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  • Category: Miscellaneous

    Expenditure tax may be a good idea but what about the implementation and compliance?

    Time to time there are public demands for expenditure taxes in place of the taxes like income tax etc. Government also must be considering this aspect many times but seeing the difficulties could not implement it. In the recent speech by Finance Minister there was a mention about this and some people believe that India may now consider switching to that regime from the existing income tax regime. We do not know the final outcome so far and let us wait for the Govt decisions in this regard.
    My point is that in income tax also the biggest problem for government is to realise the income tax from all those who are hiding their income and not paying tax. In expenditure tax also the transactions which are not mapped in digital online space will escape from the expenditure tax net. The basic problem in our country is that of implementation and compliance which will remain same in the new regime also.
    What are your views on this?
  • #749467
    Very interesting post submitted by the author. India is the big country and the nation is exploring all possible ways and means to extract money from everyone who is the earner and he should be sincere tax payer. Through income, the tax was not realized because by showing under income in many cases, the taxes are avoided and government is being denied with benefits. But what the new thought process of levying expenditure tax is truly welcome and that would have the toe on those high spending public on such things which are luxurious in nature and they can afford to pay tax. And those who are less spending would be safeguarded and would not be bothered at all with new thinking on tax implementation. My full agreement to the expenditure tax and flawless laws should be made to implement the same.
    K Mohan @ Moga
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #749471
    I think it is the responsibility of taxable people to pay taxes. The government from time to time changes the tax system to suit the needs of the country. The author here speaks of the implementation of the Expenditure Tax Regime, which is already implemented. Transaction mapping system already implemented. Necessary transaction mapping is also being done by the concerned department of the government. So now our only duty is to pay the tax in an honest way. Don't hide any kind of financial transaction for small tax evasion. A little co-operation with the system that the government has put in place can be successfully run by our support only. So we should not blame the govt. always.
    Believe in the existence of God the superpower.

  • #749488
    Long back we have a discussion on this site about taxes and it was mentioned by me in that post about tax on expenditure instead of income tax. Recently the concept was mentioned by the finance minister in the Parliament. There may be some discussions among the officials to see the positives and negatives of this proposal before taking a final decision.
    It is good if this system is brought in. The problem of black money will not be there, Everybody can bring their money openly into their bank accounts and they will pay tax only on the money they have spent. How to monitor these expenses and how to see that no one will avoid paying tax on the purchases they made. Already sales tax is there. In addition to that based on the amount, one is spending the percentage of tax may be decided. However, let us wait and see how this is going to affect the Indian Economy.

    always confident

  • #749492
    I had been advocating and writing about the nd of Expenditure Tax to replace Income Tax .
    For prof, I am giving below a few links to my posts in this forum:

    1." I am of the opinion that we should slowly move towards expenditure taxation rather than income taxation." My response in this 2019 thread

    2 My forum thread in 2021: Expenses should be the basis for tax and categorisation

    3. "I always felt that instead of income tax there should be expense tax"

    My logic is that whatever income one earns has to be used for spending. Otherwise there is no use of income. The difference between a high income earner and low income earner is there in the spending. So instead of taxing the income let the expense be taxed. The higher spender will naturally have to pay higher tax. The multi tax on the same income will thus be removed. Tax calculation will be easy, hassle-free and there will not be tax evasion.
    This can be implemented by making digital payments system. and routing every transaction, however small or big through banking system. Cash transactions should be tapered down and high charges should be imposed on cash transactions. Every transaction should be subject to a banking Transaction Tax which should automatically be loaded on the transaction then and there. For this the digital system should be more expanded and made more robust.

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