One of Prime Minister Modi's poll promises was to end this 'tax terrorism' and give relief to not just individual taxpayers from the middle classes, but also to business and small entrepreneurs all across the country

Encouraging and building a non-adversarial tax regime is one of the most pressing needs in India today. Tax laws are complicated, convoluted and often redundant. The officials charged with administering the tax system make arbitrary judgments and commit to rash decisions. Tax-evasion may not be a direct result of this opaque tax regime but it may owe a part of its origin to this. Let us look at the various problems and complexities of the current taxation environment with a special focus on businesses.

Multiple and numerous taxes:

Tax payers are aggrieved due to high and multiple kinds of taxes, duties, levies and cess etc. making compliances and payments difficult and cumbersome resulting in huge wastage of time and manpower. In fact at least 20% of the total official time is wasted only on this account.

Inspector/Bureaucratic Raj:

Due to numerous laws, taxes, duties and levies, one inspector/officer or the other from multiple govt agencies is always sitting on the head of the businessman/industrialist harassing him or directing him to attend to his office to make all sorts of unnecessary enquiries, probe the books and records and somehow find some fault/ irregularity or unintentional lapse/omission to create a case to demand graft. Most of these public servants who treat themselves as Super Boss having powers of arrest and prosecution neither think nor are taught that in absence of business and industries; the  govt will get no revenue to pay for their salaries and for other purposes.

High Incidence of taxes:

An entrepreneur somehow arranges interest bearing capital by mortgaging his assets, invests the same in business with great risk, works tirelessly for the success of his business, faces great harassment in the hands of public servants/bureaucracy, pays excise duty, VAT, TOT, trade licence fees, Octroi, profession tax, P.F, ESI and so many other taxes; and then is forced to cough up income tax @34% of whatever profit is left to himself.

No person feels comfortable in paying such huge income tax particularly considering the fact that if his business falters and start making losses due to any reason; the government or the tax agencies will neither rescue him nor give him any relief. Hence the incidence of income tax needs to be suitably and equitably reduced for better compliance and the govt should strive for higher revenues by adopting the simple business technique of maximisation of profits through high volumes with lower margins.

Large portion of Tax payment gets wasted:

The other genuine grievance of tax payers is that a big portion of his tax payment goes waste in payment of  salaries of govt staff, interest on loans taken by governments, gets plundered in the distribution chain of numerous  government schemes and subsidies or on wasteful revenue expenses and is not productively utilized .

One of Prime Minister Modi's poll promises was to end this 'tax terrorism' and give relief to not just individual taxpayers from the middle classes, but also to business and small entrepreneurs all across the country.

Albert Einstein once said, “The hardest thing in the world to understand is tax.” Let's hope the government takes quick steps and proves Einstein wrong atleast on tax.

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(Kolkata-based Dalbir Chhibbar practised as a CA till 1990 and later started his own buinsess)