TAX BASE

Hello friends welcome to Sonu live ,in this article I’m going to tell you about TAX BASE, INDIA HAS RECENT TAKEN SEVERAL STEP TO ENHANCE THE IT IN INDIA, NARROW TAX BASE AS REMAINED A BIG CONCERN FOR GOVERNMENT OF INDIA. DISCUSS THE CAUSES AND THE STEP TAKEN BY THE GOVERNMENT

Understanding Tax Base and Concerns in India: A Comprehensive Analysis

The term “tax base” encompasses the total income, assets, or transactions subject to taxation by a government. A wider tax base implies increased contributions to government revenue, facilitating enhanced spending on infrastructure, social services, and developmental initiatives.

Narrow Tax Base in India:

India has long grappled with a limited it, where only a relatively small segment of the population and economic activity contributes to tax revenue. This presents various challenges:

1. Limited Revenue: A narrow base constrains the government’s ability to fund essential services and achieve developmental objectives.
2. High Tax Burden on Few: The tax burden disproportionately falls on a smaller group of taxpayers, potentially hindering economic growth and fostering tax evasion.
3. Inequity: A narrow base results in an uneven distribution of the tax burden, potentially affecting social justice and economic fairness.

Causes of Narrow Tax Base:

Several factors contribute to India’s restricted it:

1. Large Informal Sector: A significant portion of the economy operates informally, evading formal taxation.
2. High Compliance Costs: Complex tax laws and cumbersome procedures can discourage compliance, especially among smaller businesses and individuals.
3. Exemptions and Loopholes: Numerous exemptions and loopholes in the tax code allow legal avoidance of taxes.
4. Limited Tax Administration: Inadequate infrastructure and manpower for tax collection and enforcement impede effectiveness.

Government Steps to Widen Tax Base:

Acknowledging the importance of a broader it, the Indian government has implemented various initiatives:

1. Formalization Initiatives: Programs like “Make in India” and “Start-up India” incentivize the formalization of the informal sector.
2. Simplification of Tax Laws: Initiatives like Goods and Services Tax (GST) have streamlined tax regimes and reduced complexity.
3. Direct Tax Reforms: Changes in income tax slabs and increased scrutiny of high-income individuals aim to enhance compliance.
4. Digitalization of Tax Administration: Online platforms for filing returns and tracking transactions enhance transparency and efficiency.
5. Financial Incentives: Schemes like tax rebates and rewards for voluntary compliance encourage participation in the formal tax system.

Challenges and Outlook:

While these initiatives show promise, expanding the it remains a complex and ongoing process. Challenges such as corruption, lack of awareness, and resistance from vested interests persist. Continued efforts in policy reforms, enforcement, and fostering a culture of tax compliance are crucial for sustained progress.

Conclusion:

Addressing the narrow tax base is vital for India’s economic and social development. By understanding the causes and assessing the government’s ongoing efforts, we can better evaluate progress and contribute to effective strategies for achieving a broader and more equitable tax system in India.

Read More-https://sonulive.in/what-is-black-money-main-causes-of-its-generation-in-india/