Should India abolish personal income tax?

Only a few % of the population actually pay taxes. The revenue contribution is very low from this source. If the tax is abolished what will be the impact on the economy?

Public Comments

1. if tax is abolished, then do u think that there will be any democracy, it is good that there is tax \ there will be no development in the economy of the country.
2. This is the only major Direct Tax on Income but tax base is so low that the cost of collection is perhaps not worth the effort as only salaried classes in organized sector who cant evade land up paying while most evade by understating income or not paying at all though having huge incomes! Even for equity reasons in the above situation it seems desirable to do away with this tax as it has no relevance when aveues of employment are not there to desired levels!Also with Taxes on Services being much easier to collect without heavy collection cost ,it will be a popular measure if this tax is removed from the Statute Book without much loss in Government Revenues!
3. Abolishion of personal income tax is not a solution. More people who are earning more income is not paying taxes(doctors, engineers,autiors, businessmen and etc) or they are decalring very less income. More income earning people should not be allowed to escape from paying tax.
4. I haven't studied, how many pay personal IT, however I am sure it is not paid truly. I have to say about salaried personal IT, where in total injustice are done with, other than class 1 & 2 gazetted officers of Govt. Dept. and below manegirial posts in public secters. The ratio of cost of living has risen in relation to the rise of salary since the period of 3rd Central Pay Commission, when the refered employees were not taxed. I served in accounts branch of IAF for 38 years and had viewed the financial crices of class 3 officers and below officer grade, how they suffered while one side meeting their expences and other side paying IT. Govt. must consider this, it can ascertain by its' resources to know the other income of such employees and fetch IT from them.
5. abolition of income tax, good idea , lets abolish all taxes and keep only single taxation.................. hehe come out dude, will happen, will takes ages, and anyways only 3% people are paying income tax, so already 97% people have assumed it does not exist.
6. economy will have more deficit if u abolish taxes...already india is not that much rich that it should be abolishing the taxes
7. No.
8. In India it is not possibe india is a big country goverment needs fund to run the country for prosperity for defence So forget it it is not possible.
9. Should India abolish income tax? Yes. Is it likely? No. Like others mentioned taxes are needed. They provide for infrastructure development (roads, power etc), pay for country's defense (army) and law and order (police and judiciary). At least that is the intent of taxes. How much is actually utilized and how much is lost due to corruption is a different story. There are many reasons for low revenues mostly related to under-reporting of the income. Salaried people cannot under-report and thus bear the brunt of taxes. A better approach to taxes would be consumption tax instead of an income tax. Consumption tax (like service tax) will be levied on all the products that are consumed in the economy. This will solve the problem of under-reporting as everyone who buys a product will pay the tax. Moreover, like standard deduction you can not have a standard tax on basic necessities (like food, gas etc). Unfortunately, nobody is considering this tax reform.
10. It is high time the concerned authorities think on the lines of abolishing personal taxes on the income earned. The cost of collection is almost equal to the amount of revenue. Unnecessary paper work and lot of wastage of money in collection. Any how, our F.M. is charging good service charges at source on all services. Now in the place of Incometax, the Government may introduce 'Expenditure Tax' on all luxary items and collect at source. That is to say that one will pay tax while they use the money rather than when they earn. The tax should be uniform to all. For example a house is a neccesity for all. So the Government should tax from the people who own second and third houses.
11. No body honours the income tax.They always try to hide the original tax values.But after a particular level ( higher position ) they cannot avoid it.They have to pay.But SOme of them have advances like MNC's salary package is like, Basic Hra Special allowance. Income tax calculated for Basic to be compulary.But Remaining all adjustable so they can hide,cannot be hidden in Basic. Regards, Dinesh