This refers to Anjani Kumar’s article “Zeroing in on the parallel economy’” (February 6). It is shocking to know that only 1.5 million people declare income of over Rs 10 lakh a year. The most honest tax payer in the country is the salaried person, who doesn’t have the option to hide income. However, some senior-level companies have worked out various types of reimbursements, taking advantage of loopholes in the Income Tax (I-T) laws. I would like to make a few suggestions to help plug such loopholes and increase the exchequer’s revenue:
First, remove all exemptions of any type, except critical and chronic illness. No deductions under Sections 80C or 80 CC should be allowed. Second, the I-T rate imposed on the annual income between zero and Rs 10 lakh should be 10 per cent, so that no person is out of the I-T net. This will help catch organisations that give salaries in cash lower than amounts shown on employees’ income slip. Third, PAN and Aadhaar cards should be made mandatory. Fourth, a 20 per cent tax rate should be imposed on those earning Rs 10-20 lakh a year, and 30 per cent on annual incomes above 20 lakh. Fifth, taxes must be imposed on all luxury items, including jewellery, cars, foreign trips, children’s higher education, of the rich. Sixth, most black money goes into land deals and property. Hence, the base rate in all areas should be kept at the real market value. But registration fees should be reduced, so that people are encouraged to pay the entire amount by cheque. Seventh, agricultural lands should be registered at market value with reduced registration charges, so that rich farmers pay their dues honestly.
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