Taking on tax evaders

A lot is said about black money stashed away abroad but too little attention is paid to black money in India


It is no secret that too few people pay income tax in India.

A lot is said about black money stashed away abroad but too little attention is paid to black money in India. Entire sectors such as real estate are fuelled by it. The political system is oiled by cash transactions. The result is that the Indian state is starved of fiscal resources.

Prime Minister Narendra Modi has now sent out a stern warning that his government will go after tax evaders who do not disclose their true income by 30 September.

This is a bold gambit that brings back memories of the campaign by V.P. Singh to get tough with tax evaders three decades ago. What happened later is well known.

However, Modi should be careful that his welcome call for citizens to obey tax laws does not lead to harassment by tax officials. The long-term solution is for his government to push ahead with reforms that will create a money trail that the taxman can follow.