Columnist A N Shanbhag has sweeping suggestions on income tax reform and how the revenue collectors should get a new look
A simple tax structure induces better tax administration. Therefore, a tax structure should comprise of low rates, few slabs, a broad base, minimal concessions, no surcharges and, in cases of exceptions, clear guidelines.
The Kelkar Committee has identified four operational objectives relating to the direct tax code that can most effectively achieve these principles. These are:
1) Institution of a simple and transparent system.
2) Reduction of transaction costs of tax revenue collection and compliance costs of taxpayers.
3) Alignment of incentives of taxpayers and the tax administration.
4) Widening of the tax base.
To provide quality service to taxpayers, the department must increase the expenditure on taxpayer service from the present level of about 1 per cent of the total expenditure on tax administration to at least 5 per cent.
It should also establish taxpayers
