From New Dispaches BOMBAY: In its struggle to get people to pay income tax, the Indian Government has finally resorted to the most powerful modem weapons: the computer.
As government agencies computerize their operations, they tum Copies of their records over to the Inland Revenue Authority India’s income tax department to be scrutinized for tax dodgers.
Economists here suggest that India probably has the highest number of income tax evaders in the world. In a country of 800 million people, only about 2 million pay income tax. The vast majority of Indians are too poor to owe income tax. Incomes below 18,000 rupees are not taxed, and the average annual income is about 4,600 rupees ($300).
No one knows how many Indians should be paying tax and aren’t, but experts think the figure
is quite high. The National Council of Applied Economic ‘Research estimates that 500 billion rupees ($32 billion) in taxable savings is hidden in places ranging from family vaults to bedroom furniture. ‘The reason for hiding so vast asum is obvious: India taxes its wealthier Citizens at very high rates.
‘The tax on incomes from 18,000 to 25,000 rupees is 25 percent; up to 50,000 rupees, it is 30 percent; on incomes up to 100,000 it is 40 percent, plus a 5 percent surcharge; and on incomes above 100,000 rupees, 50 percent with a 5 percent surcharge.
Up to now the income tax department has tried to locate tax delinquents by means of ‘draconian search operations, consisting largely of sudden swoops on businesses, family mansions, and deluxe apartments around the country.
Faced with a budget deficit and aware that the public will resist further increases in sales taxes, the government has come up with the idea of using computers to track down income tax delinquents.
It targeted Bombay, the country’s financial capital, to initiate the program: Computer checks there added another 150,000 names to the 1 million people already on the income tax rolls.
‘These new taxpayers helped lift the income tax revenue from Bombay from 20 billion rupees last year to 26 billion rupees ($1.6 billion).
The first names came from the Regional Transport Office. Its computerized list of Bombay taxi owners provided the tax department with the names of 23,000 new taxpayer, who have since paid 40 million rupees in income taxes.
Truck owners were the next target. The transportation office provided the names of 57,000 truckers, among whom the tax department found about 19,000 people to add to it rolls.
The department then turned to dealers in high priced cars. Twelve dealers provided the names of 45,000 car buyers, 11,000 of whom were not paying taxes. The construction industry and real-estate developers provided the names of 27,000 new taxpayers among 150,000 apartment dwellers.
Banks surrendered the names of customers who had purchased money orders in excess of 10,000 rupees, adding another 10,000 names.
Many tax evaders were found even among the agents who sell government savings certificates as a legitimate tax shelter. Of 15,000 agents, 5,000 received a letter from the tax department suggesting that they start declaring their incomes.
Article extracted from this publication >> August 18, 1989
