The push for a cashless economy does not automatically guarantee an improvement in tax compliance, Centre for Development Studies (CDS) director Sunil Mani has said.
Speaking at the observance of the 157th Income Tax Day at the Aayakar Bhavan on Monday, Prof. Mani said cashless transactions in the country had plummeted in the country in recent months, proving wrong the assumption that more number of people were opting for cashless transactions.
He attributed the trend to a number of reasons, including the fact that one in every two Indians did not have bank accounts. Besides, the low level of digital literacy and the dismal growth of physical infrastructure required for the transition were other factors that led to the situation.
According to Prof. Mani, while Norway ranked the highest among the top cashless countries, the Scandinavian country also contributed most in terms of share of unaccounted income to the Gross Domestic Product (GDP) among the developed countries. On the other hand, Japan that had a highly cash-based society, was among the least affected by unaccounted money.
Former High Court judge and chairman of the Farmer Debt Relief Commission K.R. Udayabhanu said the improper implementation of the prescribed provisions relating to tax collection had led to a large number of such cases pending before the courts. While around 10,000 cases were pending in the Supreme Court with respect to tax, close to 75,000 cases were pending in the High Courts and appellate tribunals across the country.
The courts usually intervened in such matters when the actions of the Income Tax department were not in accordance with the principles of natural justice, he said.
Speaking on the occasion, Kerala Public Expenditure Review Committee member R. Mohan said the infusion of technology to the system of tax collection had brought corruption down significantly.
According to him, the implementation of the Goods and Services Tax (GST) was expected to bring an end to the “real estate godown culture.” The imposition of multiple taxes earlier prompted many companies to establish godowns or warehouses at various places owing to the varying taxes that existed in different States. With the uniformity in imposed taxes, companies would no longer feel the need for several godowns, paving the way for the possibility of more productive use of land.
Info-based era
He also said tax personnel in the country were in the midst of an information-based era.
The decision of the Goods and Services Tax Network and the Central Board of Direct Taxes to share data and analytics would prove to be a revolutionary move in reining in tax evasion.
Inaugurating the observance, Commissioner of Income Tax (Appeals) M. Sampath exhorted tax officials to play a crucial role in nation building by working to fulfill the expectations of the public.
Cultural activist Soorya Krishnamoorthy urged the Income Tax department to intervene in allocations that were made for “unproductive causes.”
He also called for incentives for those who paid income tax regularly.
