The Hindu Business Line : How Jaswant can expand the tax base

As you know, India has a parallel economy believed to be at least as strong as the mainstream economy, if not stronger. The presumptive taxation schemes targeting the retailers, truck operators, and so on, have bombed for want of imaginative implementation, besides being bedevilled by quite a few glitches. If the tax-paying population does not increase, the brunt would continue to fall on a few honest taxpayers. A number of things can be done to spread the tax net.

Agricultural income must be brought into the tax net in the manner suggested by the Kelkar Committee. TDS must be extended to as many sources of income as possible so that tax evasion is foiled right at the source. There must be tax on donees so that there is little incentive to use the gift route towards tax evasion.

And last, but not the least, presumptive tax schemes must be designed and implemented imaginatively.

Parenthetically, it may be mentioned that the presumptive tax scheme as the name suggests, presumes a scientifically but attractive (from the taxpayers' point of view) profit margin — Rs 2,000 per month per truck, 5 per cent of turnover, and so on, which renders tax evasion difficult.

Gift is a gift

I AM A salaried person getting salary that is a shade above the tax-free limit. I have landed a gift of Rs 1.5 lakh. What would be the tax consequence? -- S. Srikant, e-mail

Don't lose sleep over this. Gift, assuming it is genuine, is totally tax-free. The Government braced itself to taxing gifts as income a few years ago only to beat a hasty retreat. And there is no gift tax either. Go ahead and enjoy.

(ASK! Send in your queries on accounting, auditing, corporate law and taxation to ask@thehindu.co.in)

S. Murlidharan

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