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There is potential to raise resources
Dear Minister Jaitley:

Today, only three per cent of our population file income tax returns. Do mandate those who purchase goods in excess of Rs 50,000 to file tax returns. With a strong information technology system in place this should be possible. Please target bringing 10 per cent of the population under the IT net by 2019 and progressively increase this to 25 per cent by 2024.

The services sector contributes to 60 per cent of the GDP, but accounts for only 18 percent of revenues. There is, thus, scope for increasing receipts under services. A large number of professional groups, including lawyers and doctors, have been kept out of the purview of service tax for no valid reason. Do bring them under the service tax net. The same goes for traders, small businessmen and civil contractors. Do reintroduce the sytem of presumptive taxes.

Such efforts would be necessary to increase revenue collections and increase the tax: GDP ratio, which is presently at such a low level of around ten per cent. With your party’s clout with traders and businessmen you could persuade them to co-operate.

Food, fertilizer and oil subsidies account for over Rs 200,000 crore. These must be better targeted. For instance, domestic LPG, diesel and other petroleum products (except kerosene) are used by sections that can afford to pay the cost of such products. Ditto when it comes to the PDS of rice, especially in Tamil Nadu. To start with, exclude those with annual incomes of over Rs 180,000 from these benefits.

Education has become a thriving business. Private schools charge over Rs 50,000 p.a. in urban centres even for pre-school children. Likewise, institutes of higher education in engineering and medicine levy hefty capitation fees. These give rise to transactions in black money.

Liberalising higher education from controls and taxing income on the high fees collected could help expand revenues. In Tamil Nadu, a medical seat is sold at around Rs 50 lakh plus and a seat in an engineering college of repute, over Rs 5 lakh. Prosperous educational institutions are engaged in a variety of other industrial activities including media and politics. The assets of a minister in the UPA II government, an education Czar, increased from Rs 5 crore to Rs 70 crore in five years. The Goods and Services Tax Act is estimated to have the potential for expanding the tax net.

Please endeavour to introduce this from the next fiscal. That your party stood in its way when you were in the Opposition should not now stand in the way of implementation.

All this calls for statesmanship and taking people along like what Atalji did.

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