The Modi government has long maintained that GST, the benami law and demonetisation have incentivised honest taxpayers. Indeed, the tax compliance level on due date reached an average of 65% by April this year from around 55-57% in September-October last year, which is a major success attributed to the new tax regime. However, the Centre is now reportedly mulling more immediate rewards to up the ante on compliance.
A top government official told The Economic Times that a committee has been set up under Central Board of Direct Taxes (CBDT) to draw up the incentive programme. A cup of tea with the state governor, priority check-in at the airport, dedicated toll lanes, airport lounge access and passports on priority are some of the rewards that could be offered to exemplary taxpayers.
The source added that the committee will look at reward programmes instituted in various countries and draw from the global best practices. Interestingly, the definition of model taxpayers as per the proposed scheme may not be based on the amount of tax paid but on criteria such as regularity in filing of returns, not being penalised or prosecuted, and not having been subjected to searches or surveys.
This is not the first time that the Indian government has proposed to reward model taxpayers. In Budget 1998-99, former finance minister, Yashwant Sinha, had introduced a new scheme called Samman "to demonstrate the society's recognition of honest taxpayers' important contribution to the national cause".
But under the scheme, which was discontinued in 2004, the income-tax department only honoured assessees - across three categories, namely business, profession and salary - with a declared income of Rs 20 lakh or more. This time round, the CBDT hopes to reward honesty, not the amount of tax collected.
Similar incentives are already in place in several countries. For instance, in South Korea, honest taxpayers reportedly receive certificates and get access to airport VIP rooms and free parking. In Japan, model taxpayers can get a photograph taken with the emperor.
In the Philippines, they can have their name on a lottery for compliance under the value added tax regime. Pakistan, meanwhile, has a scheme to reward the top 100 taxpayers every year with access to VIP lounges at airports, fast-track clearance at immigration counters, free passports and enhanced baggage allowance."While the focus has been to increase the tax base and revenue collections through various measures like demonetisation, GST, linking of Aadhaar with tax returns etc., there is a need to bridge the trust gap between tax administration and the taxpayer, especially the honest ones who have been contributing to the national development through payment of taxes," Vikas Vasal, national leader, tax, Grant Thornton India, told the daily.
"Therefore, any scheme to cut down on disputes and litigation, and to acknowledge / reward tax payers will be a welcome move."
The proposed scheme comes at a time when the income tax department is also pushing hard to widen the tax base. While around 1.06 crore new tax filers were brought into the net in the last fiscal, the CBDT is targeting 1.25 new additions during the current year.Edited by Sushmita Agarwal
With PTI inputs