Pointing out at the high pendency of tax cases, Wipro chairman Azim Premji on Tuesday said that efforts of the tax department should be directed at increasing the tax base.
“Revenue productivity could be higher if the tax administration cost could be directed at increasing the tax base rather than being applied in wasteful and repetitive litigations,” Mr. Premji said during Income Tax Day celebrations. He suggested that the responsibility of revenue collection should be separated from making sustainable tax assessments. This has been successfully implemented in many other countries, he added.
He cited the latest economic survey, which has said that the total pendency of cases in direct and indirect taxes pertains to around ₹8 lakh crore, which is close to 5% of the GDP whereas the rate of success of appeals filed by the tax department is less than 30%. “Which means 70% of the appeals of the tax department are reversed in favour of the assessee.”
Empowerment at the department level to settle disputes amicably is very important, he said, adding that the latest developments in these areas are encouraging and in the right direction.
According to him, resistance to tax often arises on account of a perceived lack of clarity, transparency and accountability in public spending. The tax to GDP ratio in India is about 16%, including State taxes, whereas the figure is between 35 and 40% in developed countries. “It is imperative that India’s tax to GDP ratio climbs substantially so that our public and social expenditure can be expanded,” he said.
‘India must introspect’
Theatre artist Arundhati Nag said that India has ‘much to look within’ and introspect on why we have become an intolerant society.
“We have become an intolerant society, we cannot take law into our hands, we cannot be lynching poor people and we cannot be witch hunting. India has much to look within. It’s time to look at the quality of life that we are giving our children,” she said.
Stating that there is a need to create a nation of artists by merging education with culture. “Culture is really about what we do when the door is closed... how we treat one another when the door is shut,” she said.