Experts have openioned that abolishing income tax and other levies and replacing them with some other suitable form of revenue is feasible and desirable.
The radical proposal, which is being talked about by the BJP, relates to abolition of all direct and indirect taxes for individuals as well as corporates in favour of a nominal banking transaction tax.
The proposal would involve hard arithmetic as the revenue losses would have to be recovered from other sources while stressing that India needs a stable, equitable and a friendly tax regime.
"...it may reduce corruption and collusion with the Government agencies. It may remove the tax burden from individual as well as corporate taxpayers. The taxpayers will also not indulge into practices like falsification of accounts, money laundering and other illegal ways of tax evasion," said Girish Vanvari, Co-Head of Tax, KPMG in India.
He said, however, that a comprehensive and holistic analysis is required before going for such a drastic reform.
Another leading global tax consultant PwC India, however, expressed apprehensions saying that abolition of income tax would be against the progressive system of revenue collection.
"It is unlikely that we can completely dispense with the collection of personal income tax and at the same time maintain the progressive tax system to meet the revenue requirements," said Rahul Garg, Leader Direct Tax, PwC India.
Sudhir Kapadia of EY, a global tax consultancy firm, said it is feasible to abolish the personal income tax, but the question is whether it is desirable.
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