New Delhi,06/07/19:Combination of interim and final Union Budgets for the year 2019-20 has complicated Direct-Tax structure which could lead to tax-evasion. With persons having assessed income upto rupees five lakhs per annum totally exempted from Income Tax, a person having income say rupees 501000 will evidently try to evade rupees 1000 from income because otherwise he would be getting exemption only on income upto rupees 250000. Basic exemption-limit should be same for all even if it could be less than rupees 500000.
Likewise cess-imposition of 3-percent for annual incomes between rupees two and five crores and 7-percent for income exceeding rupees five crores could be better replaced by another slab of 40-percent for incomes exceeding say rupees one crore so that higher tax-slab would have been applicable only on income exceeding with tax-slab of 30-percent. Any tax exceeding 30-percent can tend for tax-evasion, and this is why report of Raja Challaih committee recommending maximum tax-slab of 30-percent in tune with most other countries was implemented.
Best would have been to have basic exemption limit of rupees 3 lakhs with nominal 5-percent tax-slab for income between rupees 3 and 5 lakhs to retain a wider tax-net. Those having income above rupees one crore could be asked for a compulsory deposit of say 30-percent of income exceeding rupees one crore in proposed long-term Elephant-Bonds with some nominal interest-rate for infrastructural development. Marriage-tax imposed on hi-fi marriage celebrations by ultra-rich could be yet other option for revenue-earning.