The Income Tax filing decision
Currently in India, the income tax filing season is on. Citizens
are mandated by law to file their income
tax returns. The numbers are not quite there about how many earning citizens
pay taxes in India. In the year 2013, the
number stood at 28.7 million who filed income tax returns. Of that number,
16.2 million did not pay any tax. That meant the ‘real’ tax paying citizens
amounted to 12.5 million. Now, that is a mere 1 percent of the 1.23 billion who
populate India. The Hindu reports
that according to the Economic survey tabled in Parliament, only 5.5 per cent
of the people who earn pay tax and only 15.5 per cent of the net national
income is being reported to tax authorities.
The reasons why India’s tax paying rates are low are varied. Many of those reasons can’t be undone soon enough to get citizens to pay their taxes. In fact to get all citizens on to a tax playing plank will take time. Yet what the authorities can do is to make it easier for people to pay their taxes, and to encourage compliance by keeping tax rates low. Private tax service firms have also stepped in to play their part in helping citizens file their tax returns. These firms using technology platforms have made it almost a one-click operation. That is, citizens who want to file their income tax returns can use online portals to upload a document like Form 16 and file their taxes with zero hassles.
On a personal note, a few years ago I moved from using an Accountant, to filing the returns myself using an online portal. In fact, data from the income tax department’s e-filing website shows the number of registered users grew from 12 million in 2012 to a whopping 53 million in 2016. To make it even more consumer-friendly, companies have now made available Apps that citizens can download on to their smartphones and use it to file their income tax returns. It’s important for businesses and the government to know that citizens, aka consumers balk at anything that requires cognitive exertion. People like to do stuff by themselves only when it’s simple and easy to understand and do. One way in getting people to pay taxes is by making it easy to compute their taxes. Agreed, that may still not exact compliance but it surely will prompt better self-inclusion in the tax paying net. The filing of income tax returns is one arena where there has been ample progress thanks to technology. It’s almost a one-touch operation now.
I can vouch for that.
The reasons why India’s tax paying rates are low are varied. Many of those reasons can’t be undone soon enough to get citizens to pay their taxes. In fact to get all citizens on to a tax playing plank will take time. Yet what the authorities can do is to make it easier for people to pay their taxes, and to encourage compliance by keeping tax rates low. Private tax service firms have also stepped in to play their part in helping citizens file their tax returns. These firms using technology platforms have made it almost a one-click operation. That is, citizens who want to file their income tax returns can use online portals to upload a document like Form 16 and file their taxes with zero hassles.
On a personal note, a few years ago I moved from using an Accountant, to filing the returns myself using an online portal. In fact, data from the income tax department’s e-filing website shows the number of registered users grew from 12 million in 2012 to a whopping 53 million in 2016. To make it even more consumer-friendly, companies have now made available Apps that citizens can download on to their smartphones and use it to file their income tax returns. It’s important for businesses and the government to know that citizens, aka consumers balk at anything that requires cognitive exertion. People like to do stuff by themselves only when it’s simple and easy to understand and do. One way in getting people to pay taxes is by making it easy to compute their taxes. Agreed, that may still not exact compliance but it surely will prompt better self-inclusion in the tax paying net. The filing of income tax returns is one arena where there has been ample progress thanks to technology. It’s almost a one-touch operation now.
I can vouch for that.
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