Unevenness in Taxes Paid by Salaried Class & Businesspeople: Adhia

E-way bill and invoice matching in the new indirect tax regime will curb evasion, Finance Secy Hasmukh Adhia said.

There is "unevenness" in the taxes paid by the salaried class and business people, as 50 percent of the 7 lakh companies which file I-T returns show zero or negative income, Finance Secretary Hasmukh Adhia said on Monday, 5 February.

The government, he said, is working on removing the “unevenness in the tax paid by different classes of people” by using a foolproof technological system.

He said the taxpayer base has gone up after the GST roll-out as well as demonetisation and there has been a concerted effort to make India a tax-compliant society.

E-way bill and invoice matching in the new indirect tax regime will help curb evasion, he added.

Speaking at the Confederation of Indian Industry (CII) post-Budget meet, Adhia said: "In the personal income tax (category), the salaried ones are paying more compared to business people."

For assessment year 2016-17, 1.89 crore salaried individuals filed I-T returns and paid total tax of Rs 1.44 lakh crore, which works out to average tax payment of Rs 76,306 per individual salaried taxpayer.

Against this, 1.88 crore individual business taxpayers, including professionals, paid total tax of Rs 48,000 crore, which works out to an average tax payment of Rs 25,753 per individual business taxpayer.

The department's number of effective taxpayer base has increased from 6.47 crore at the beginning of April 2014 to 8.27 crore at the end of March 2017.

"GST has a very promising future... Honesty will get a premium in Goods and Services Tax," Adhia said.

With regard to demands for reduction in corporate tax rate, he said globally the revenue mop up from personal income tax is much higher compared to corporate income tax.

...While in India the personal income tax collection has to go up. Once that goes up then we will have some more scope.

Hasmukh Adhia

In the 2015-16 Budget, Finance Minister Arun Jaitley had announced that the corporate tax rate would be gradually lowered to 25 percent from the then-current 30 percent over the next four years.

Over the last three years, the government has announced reduction of taxes in a phased manner for various categories of corporates and currently only 7,000 corporate houses are still in the 30 percent slab.

In Union Budget 2018-19, Jaitley proposed to lower corporate tax rate to 25 percent for businesses with turnover of up to Rs 250 crore.

With regard to notices sent to individuals for high value deposits in banks post-demonetisation in November 2016, Adhia some of these people have filed their returns showing "very very small income", while most of them have not filed I-T returns.

"Those notices will be taken to their logical conclusion in the next 2-3 years... So the inflow of more taxes will continue next year also and may be the year after," Adhia said, adding that the department has been "very conservative" while projecting tax revenue for the next fiscal.