Out of the 125 crore Indian population, only 4.1% people have filed income tax (IT) returns for the year 2015-16. Out of this, only 1.3 crore paid tax, as the rest have income below the taxable limit. Of these, more than 90% are employees of either central or state government and those working in private sector. Similarly, in the year 2014-15, out of 3.91 crore returns filed, the returns filed by individuals are 3.65 crore and 1.74 crore people did not pay any tax. All these data clearly indicate that mostly salaried class is only paying IT and very meagre number of people from other areas is paying IT. In addition, this salaried class is also paying various other direct or indirect taxes to the government (including VAT, service tax). As the income from IT is mainly through salaried class only, instead of taxing only employees government should abolish IT up to a limit, protecting all salaried class. Let IT may be there for companies and organizations. This loss in IT income may be met through GST or other common taxes, which everyone has to pay for whatever they purchase or service they get from service providers. This can avoid lot of administrative pressure on IT department and gives a relief to salaried class and their purchase power may enhance leading to growth in the manufacturing sector.
Dr S V N Vijayendra, Mysuru