There is a national debate on abolishment of income tax in India, but is that possible and if it’s possible, is the government willing to do so?
If income tax was removed, there wouldn’t be a question of paying income tax or running away from it, thus legitimizing the money. Thus, no black money remains in the market apart from that of crime.
Since only 4% of Indian population pays income tax, the impact will be limited to the amount of 3 lakh cores that is generated though income tax.
This will also increase hugely, the amount deposited in banks because people will be freely willing to declare their income through their bank accounts and increase savings. This is not possible, it income tax is levied for people evade the tax and thus black money is generated.
Since the bank deposits will shoot up, the interest rates will also decline on loans.
Congress leader Sandeep Diksht said that the fear that lurks due to tax terrorism and income tax officers going everywhere conducting searches is a problem for the people. Income tax officers are not known to be kind and honest in their activities and most of the times people are acquitted after contracts between the culprits and income tax authorities evading justice.
Income tax accounts for about 3 percent of the total GDP income of the country. There has been a failure from the govt to keep a check on the income tax evaded by the people. This has been a great backlog of the Indian economy where black income plays a major role and has its own economic system.
Monaco, Bermuda, Bahamas, Andora and UAE are some countries who have abolished income tax.
Congress leader Salman Soz said to News X that this idea is totally immature since income taxes are considered as progressive taxes. If a person earns more then he must pay higher tax. If it’s gone, then a poor man and a rich man will be paying the same amount of indirect tax which is unfair.