As per the current income tax provisions, income tax exemption limit for individuals is Rs. 2,00,000 per annum, meaning that anybody whose income is more than Rs.2 lakhs in a year is required to pay income tax. If he does not pay income tax, the income earned by him/her automatically becomes black money, whether our law enforcement agencies could catch him/her or not.
First of all, the income tax exemption limit is ridiculously low and unrealistic and is responsible for generation of black money. The exemption limit of Rs 2 lakhs per annum means that anybody earning more than Rs 550 per day is required to pay income tax. I have seen most of the Cycle Rickshaw pullers earning that much amount in a day.
If a Cycle Rickshaw puller making 30 trips in a day and charging Rs 20 for each trip can make Rs 600 in a day, can anybody expect him to pay income tax and file his Income Tax Return? In all such cases, whether the income earned by all of them constitutes “black money”? I have given an example of Cycle Rickshaw puller.
There are street vendors,
Pan shop owners and street shop owners, all earning more than Rs.550
per day but nobody is even expecting from these persons to pay income
tax or file the Income Tax Returns. Should we call all these persons
as tax evaders and responsible for generating black money?
Persons who are regular salaried employee and professionals getting their income or salary are the only persons, who are subjected to the income tax levy. The other category of persons who pays income tax are business owners, who are big enough to get their accounts audited and required to get themselves registered under the VAT and Service Tax.
When this category of salaried persons, professionals and big business owners are forced by the tax authorities to pay the taxes in discriminatory manner, they resort to under-reporting of their income, to the extent possible. Tax authorities, so far, have been unable to check this “under-reporting” of income and this is another reason for the continued generation of black money.
Unless and until the Income Tax Exemption Limit is raised from time to time, to a realistic level, continued generation of “black money” can never be stopped. Not only our Income tax limits for various categories of taxpayers are completely unrealistic, the tax rates are also on the higher side. Our inefficient tax department, wants to tax only those category of persons who are automatically trapped in its net by getting their income through Cheque or getting their income after deduction of tax at source (TDS).
If the Government does not want to make a majority of the population as “tax evaders”, responsible for generation of “black money”, it should immediately raise the income tax exemption limit to some realistic level (say Rs 6 Lakhs per annum for individuals) with reasonable tax rates across all categories of tax payers. Unless and until, this is done, there will be continued generation of black money, while Government will always be busy in bringing back the black money from foreign soil.