Did you know that there is nothing permanent in this world other than taxes and death? There even is an old saying about the same. However, a few months back BJP MP Subramanian Swamy pitched for abolition of Income Tax to ease the burden on the middle class and promote higher economic growth in the country.
As a result you won’t need to pay any taxes to the Govt on your income, you do not need to fill income tax form 16 also or any other.
The question is, is abolishing income tax in India a good solution to ease the burden on the middle class? If yes, what would be the consequences? Read on to find out the answer.
- Lower Tax to GDP Ratio: One should be aware that a very small, insignificant percent of Indians pay income tax. If even that stops, it will lead to the reduction of tax to GDP ratio even more. Hence, there is a need to widen the tax base not abolish it. Besides, the countries such as UAE, Bermuda etc. have a flourishing economy and a stable government which allows them to manage even without income tax. For instance, UAE’s oil trade pays more than enough to sustain the government comfortably.
- Increased Disparity:Abolishing the income tax in India would lead to economic disparity: the rich will become richer and the poor will get poorer. Thus, it will reduce the amount available with the Government to invest in the welfare schemes and support agricultural prices. It will lead to a widening of the already higher income disparity.
Additional read: Tax system in India: Should Income Tax be Abolished in India?
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