By Prarthana Mitra
Paying taxes on time is considered to be the duty and sigil of any model citizen, but non-compliance and tax evasion are rampant all over the world.
Several countries instituted incentive schemes to that end, which are known to work in South Asian countries like Pakistan, Japan, Korea and the Phillippines. Honest taxpayers in Japan are rewarded with the chance to click a picture with the emperor, while South Korea offers certificates, access to airport VIP rooms and free parking. In Pakistan, top 100 taxpayers are also awarded annual travel benefits like fast-track clearance of immigration, free passports and increased baggage allowance.
Contemplating incentives for taxpayers
According to latest news reports, India is currently deliberating on doling out certain privileges and benefits to motivate citizens to comply with the tax laws, to increase the tax base and stabilise the government’s revenue collection.
On Tuesday, government officials informed the media that the Central Board of Direct Taxes has set up a committee to draw up a scheme that would list various incentives for taxpayers, including dedicated toll plaza lines for exemplary taxpayers, easy passports on priority, access to airport lounges, and priority check-in at the airport. Besides these travel perks, the model taxpayer will also be able to have a cup of tea with their state governor.
Process and precedent
Similar incentive programmes adopted by other countries will be referred to and taken into account by the committee.
Tax filers will not be rewarded on the basis of the tax amount they pay, but depending on their regularity and promptness in filing and on their track record in the past. To qualify for the benefits (still yet to be finalised), it is mandatory for a taxpayer to not have a criminal record. According to Money Control, this is similar to a scheme called Samman by the Income Tax Department which was discontinued in 2004.
Why it matters
Honest payment of taxes is a crucial measure for the government to curb black money. In the recent past, other measures such as demonetisation, amendments to the Benami Transaction Act, conducting tax raids, and cracking down hard on tax evaders have not yielded positive results. Consequently, the centre has decided to incentivise tax payments, in order to recognise honest citizens of India, especially as the number of people filing for income tax returns increases every year.
On Monday, Vikas Vasal of Grant Thornton India told the Economic Times that such measures help bring the administration and citizens closer. “Any scheme to cut down on disputes and litigation, and to acknowledge or reward taxpayers will be a welcome move,” he was reported as saying.
Prarthana Mitra is a staff writer at Qrius.