BackTaxman cometh
The finance ministry indicated over the weekend that it would withdraw its new tax forms
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The storm over providing details of foreign trips to the taxman has receded after the finance ministry indicated over the weekend that it would withdraw its new tax forms. A deeper issue remains: the high costs of tax compliance in India.
Several earlier studies by economists have shown that those who pay income tax in India have to shell out as much as 50 paise in compliance costs for every rupee they hand over to the government. There are two issues here. One, a complicated tax code that makes citizens seek out accountants to help them navigate through the process. Two, tax return forms that go into several pages for most taxpayers.
The recent decision to not insist on a paper trail for those who have provided Aadhaar numbers when filing online is a step in the right direction. The income tax code has become simpler over the past two decades. Moving to the proposed direct taxes code in its original form should be the next logical step.
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