CA Saurabh Goyal

CA Saurabh Goyal

Why we Indians don’t like to pay taxes voluntarily. The reasons can be many?

But some of the obvious reasons are-

1) Why should I pay? I am already earning very less.

2) When others are not paying….why should I?

3) What is the benefit of paying taxes? The corrupt politicians and bureaucrats will wipe it for their personal gains.

4) Tax rate ( Income tax) is too high. When I can survive in a profit margin of 5-8 percent, Why govt needs 30 percent of my profits to meet its social expenditure.

……so on….and so forth….

On the other side, whenever any natural calamity,religious or philanthropic requirement arises we all come forward and contribute wholeheartedly.

The basic difference between both the scenarios is-

On one side we don’t have any surety that whatever I have paid as taxes will be used for genuine purposes or not. Secondly, there is no direct relationship between my tax payment and benefits I get in return.

To address such a situation and to increase the income tax revenue of government multi-fold, following should be done-

1) There should be a column in the electronic Income Tax Return wherein the taxpayer would choose from the list of  areas where he desires his tax money is to be used. For eg. Education, Agriculture, Science & technology, cleanliness, Roads, Railways etc.There can be multiple field selections with percentage allocations.

2) There should be another column in the electronic Income Tax Return wherein the taxpayer would choose from the list of districts , one or multiple districts where he desires his tax money is to be used.

3) The tax paid will be linked to a unique tracking number which will be combination of PAN/ Aadhaar number/ Financial Year.

4) The taxpayer can anytime through the incometax website, track with the help of tracking number, the usage of his tax funds.

5) The central govt should appoint an IAS officer in each district (707 new IAS posts to be created) who will be responsible for tracking of expenses as per the discretion of tax payer. Such Officer will earmark the tax funds received from public to the schemes of government and will be responsible for expenditure tracking.Such officer will directly report to PMO/ Finance Ministry.

I am giving this suggestion, but I am not too much optimistic about its implementation as it involves devolution of discretionary powers of central govt in utilising around 50℅ of tax receipts. The govt will never wish to let go its powers in deciding the fate of income tax it receives.

Nevertheless,if this suggestion sees the light of the day later or sooner,there can be following advantages-

1) A feeling of attachment among the tax payers that their tax money is being utilised in their desired field with an option of tracking the same.This will motivate tax payers to voluntarily pay more and more taxes.

2) Less chances of corruption as the government machinery will always be under public scrutiny through online tracking of expenditure.

3) True spirit of democracy- Democracy is of the people,for the people and by the people.This system which is practically possible in this digital world will take care of democracy in true sense.

4) Government will also get first hand information about the wishes of people on real time basis.The direct tax( income tax) will in true sense be direct in such scenario.

5) There will be healthy competition among the residents of different districts to work hard and pay more taxes so that their district can be developed more and more. It will act as a catalyst in growth story of India.

6) If in case, any particular area of country still lag behind in development scenario, government will still have the discretion of spending indirect tax revenues in those areas.

7) In my view, this will create a growth linked scenario in the country. Hard working people will get more benefits and facilities in return.

(Author can be reached at  [email protected])

(Republished with Amendments)

More Under Income Tax


  1. Good article . As a tax payer I feel government should give medical facilities and a fixed pension for the taxpayers after a age of 60 years. Like gas subsidies the option can be given to accept or not. The pension and medical facilities depends on the tax amount paid during ones lifetime.. Not all business men are safe after he retired from business or profession. When government employees get pension why not a business or professional people..By introducing this I am sure some percentage of tax payers will declare genuinely opinion..GMR

  2. Ravi Prakash says:

    Well explained and suggesstion are praiseworthy. Fully agree with the view of the author. Our politicians should focous on the optimization of the tax revenue rather spoling and playing the dirty politics.

  3. CA K H Mahajan says:

    I also agree with view of Author that I.T rates are not reasonable. I am of opinion that to get best recovery of Revenue from IT , Tax rate upto 15 Lakhs should not be more than 10 % and income or receipts from all sources should be taxable after a not-taxable limit fixed by Govt. Thanks.

  4. T N PILLAI says:

    A good expectation of the Tax payer. But I would add a point that
    1. Strip all financial involvement and say by law makers and Babus.
    2. State clearly as to what percentage of money would be converted into development expenses. Meaning – less of administrative expenses.
    3. Councilors and other public servants mint money in Road constructions and repair and relaying works.
    4. Make all tenders details/ contract details / specifications for the benefit of general public. Meaning a display board on site
    5.Consider modernization to bring the cost and time frame of execution
    6. Chase out all Engineers, AEs and JEs out of office to be on site checking works on site.
    7 Ensure the contractors are not harassed for small benefits
    8. Ensure jobs are not awarded to men having connections with politicians.
    9 Inform the locality people where a development is taking place with time frame on completion.
    10 RTI must be strengthened

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January 2021