Why are exemptions still part of the Indian tax system despite the stress on tax reforms? A former finance ministry official has an interesting explanation. He said a top industrialist once told him rather explicitly that, "Sarkar to hamari dukan hai. Hamen jo choot chahiye hoti hai, hum woh kharid lete hain " (the government is like a shop for us, we buy whatever exemptions we need to run our business). This could explain why the direct taxes code and goods and services tax are so difficult to introduce, since exemptions are incompatible with these critical legislations.
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