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Issue/Justification

Large majority of the Indian consumer market is unorganised due to the presence of small businesses across sectors which largely deal in cash, both, when buying products and selling them.

Secondly, the operations of these small establishments spread across the county pose a challenge for the tax authorities to monitor and track the volume of trade of this sector

Suggestion

With an objective to bring the transactions of the unorganized sector into the tracking system of the government and with the easy availability of on-line mode of consummating the transactions, it is suggested that the government should introduce some incentives linked with payments made through the credit card / debit card and other banking instruments. These incentives could take the form of an additional deduction while computing the income of such persons/entities, which are directly related to the said mode of payments.

With robust mechanisms in place, this will help the government track the trail of the transactions and facilitate bringing into the tax net the potential taxpayers if any that earn taxable income beyond the maximum exemption limit who were otherwise outside the tax net.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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