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Top taxpayers likely to get PM or FM’s invitation to tea





NEW DELHI: The government is designing a rather unconventional plan to reward India’s top income taxpayers and encourage them to part with their money.

For their contribution to nation building, these tax payers will have the privilege of being invited to tea with the finance minister or the prime minister, among other non-monetary incentives. The idea was to encourage them to willingly pay more in case the government needed to mobilize more revenue, a person familiar with the discussions in the government said on condition of anonymity.

The aim was to help the income tax department collect tax as painlessly as possible, the person said.

The scheme, which could figure in the first budget of the National Democratic Alliance (NDA) government’s second term, also reflects the desire of the Narendra Modi administration to work out a more progressive tax system, in which the wealthier you are the more taxes you pay. Modi had on several occasions thanked taxpayers, saying investments into connectivity and infrastructure would not be possible without their cooperation.

The plan to honour top taxpayers comes at a time when the revenue department needs to find additional resources for welfare schemes amid lower-than-expected revenue receipts. Direct tax receipts for the year ended 31 March missed the government’s revised target of 12 trillion, Mint reported on 21 May. The NDA government, which on Thursday took oath of office for a second term, wasted no time in expanding the scope of the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), a welfare scheme for farmers, which will add an extra cost of Rs. 12,000 crore this fiscal to the Rs.75,000 crore allocated in the interim budget presented in February.

“By all indications, income redistribution will be a key theme under the new government, whether it is in the form of setting up pensions or of creating an environment for creating jobs and infrastructure in rural areas,” said Rajat Kathuria, director and chief executive of think tank Indian Council for Research on International Economic Relations.

For domestic companies with incomes in the range of INR 1-10 crore, a 7% surcharge is applicable, which rises to 2% for foreign companies in this income range.

The surcharge goes up to 12% for domestic companies and 5% for foreign companies with incomes above INR 10 crore. According to data available with the income tax department, the higher the income of individuals and businesses, higher the average tax collection from them.

Data also shows that 1,053 individuals with incomes of INR 5 crore or more contributed over INR 12,000 crore in personal income tax in assessment year 2017-18.

Experts said a revival of the economic growth rate and stabilization of revenue from the goods and services tax may help the government bridge the revenue gap.

An expert committee on revamping the Income Tax Act is expected to submit its report by the end of July. This committee will give the direction of India’s direct taxation in the years ahead.

The new finance minister has inherited a slowing economy. Data released on Friday shows growth in the year ended March cooled to 5.8%, the slowest pace in nearly five years.

ImageCourtesy : Livemint.com

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