High tax rates are acting as a barrier to India's economic expansion.

Taxation is an unavoidable reality for every working professional within the tax brackets. July marks a significant period when individuals dedicate their weekends to filing their Income Tax Returns (ITR).

Why Income Tax Is Important ?

Income tax is major source of Income for government, to fulfil country needs and secure the country from outside threats. India is developing country and we have vision to become developed nation by 2047. For become a developed nation as Indian citizen its our obligation to pay our taxes on time and diligently.

As per IT Dept-Provisional figures of Direct Tax collections for the Financial Year 2023-24 (as of March 17, 2024) show that net collections are at Rs 18,90,259 crore. Direct tax contribute 6.11% in India GDP. Which is quit substantial no.

How do individuals contribute to India's growth?

We are nation of 1.44 billion people but only 6.45 percent of the population being taxpayers ,about 952 million people in India are in the working age group. Of these, 9.48 percent are taxpayers. In 9.48% about 2.08% file nil ITR. Govt has high standard control over salaried professionals but govt fail to put control over MSME Industries, Corporates and Business man. who actually make evade taxes through different ways. If every Individual, HUF and business ethically file tax then other segment need to suffer less

Why do people evade taxes?

Why do people evade taxes?

Tax evasion remains a complex issue influenced by various factors:

1. High Tax Rates and Compliance Burden: How do high tax rates, especially the top marginal rate of 42.744% in India, and the complexity of compliance, lead some individuals and businesses to evade taxes?
2. Perceptions of Fairness: To what extent do perceptions of fairness in tax systems, particularly concerning the disparity in per capita income compared to developed countries with higher tax rates, contribute to tax evasion?
3. Corporate Taxation Challenges: How does India's corporate tax structure, which while offering tax holidays for Foreign Direct Investments (FDIs), still presents barriers that may prompt businesses to evade taxes or avoid market entry?
4. Regulatory Disparities: Why is there a perception that while salaried professionals face stringent tax deductions through TDS, other sectors like MSMEs and corporates have more avenues to legally reduce their tax liabilities?
5. Behavioral Considerations: In what ways does the behavior of different segments—salaried professionals receiving post-TDS salaries versus businesses deciding on tax liabilities after deducting business expenses—affect their compliance with tax regulations?

Understanding these dynamics helps to grasp the complexities surrounding tax evasion, offering insights into how policy and enforcement measures can be tailored to promote greater compliance across all sectors of the economy.

Summary-

Income tax plays a vital role in India's fiscal landscape, supporting national development and economic stability. Addressing challenges like high tax rates and compliance complexities through equitable reforms is crucial for enhancing revenue collection and fostering sustainable growth toward India's developmental goals by 2047.