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The central government has taken the displeasure of millions of people by imposing 5% GST on the most essential items of daily life, while it is estimated that it will only get revenue of 15 billion rupees from this item. Whereas if the government had wanted it, it could only have earned more than 1.60 billion rupees by recovering the old corporation tax. This would have meant about 10 times more tax collection than the 5 per cent GST and would have affected a very small stretch. While taxing things like flour, pulses, rice, pencils, maps, light bulbs, he has taxed the poorest population in the whole country. The big question is, why did the government consider it right to tax millions of people instead of collecting more taxes for an easy route?
Currently, the corporate tax levied on major companies in the country is around 25.17 percent. It also includes different termination surcharges. Before the Crown era, this corporation tax used to be 34.94 percent. That is, corporation tax has been reduced by about 9.77 percent. While corporation tax on new businesses is even lower at just 17.01 percent. Before this tax used to be around 29.12 percent. Economic experts estimate that if the government had revoked the old corporation tax, the government could have earned an additional Rs 1.60 billion.
Corporation tax almost equal to income tax
The revised direct tax estimate for the year 2021-22 was Rs 12.5 billion, while the direct tax for the current fiscal year 2022-23 is estimated at 14.20 millions of rupees. Of this, corporation tax could be 7.20 billion rupees and 7.0 billion rupees received through personal income tax. That is, in the current year it is estimated that corporation tax and personal income tax are almost equal.
Why the corporate tax exemption
In fact, the backbone of the country’s economy was broken during the Crown period. The government wanted the maximum investment so that the economy would get back on track and people would have jobs. As a result, the government made a major reduction in corporate tax rates. The government had predicted that when the rich have more money in their pockets, they will invest the extra money instead of saving it in the banks and this will help advance the economy.
But in practice, it is quite the opposite. The richer class benefited greatly from the corporate tax cut and saved a lot of taxes. But he did not invest the money he earned from these savings. The main reason for this was that there was no demand in the market. Economic expert Ajay Shankar told Amar Ujala that any investor invests money in the market when he knows that the product produced by him will be sold in the market. But there was no market demand due to the collapse of the Crown economy. The rich class felt that what they built could not be sold. So he did not invest that savings money.
In fact, it was a wrong decision by the government. Because when there is demand in the market, people invest money in that sector. There is never a shortage of money for this. Because in this situation they get money from the bank in the domestic market or in the foreign market. While no one wants to produce when there is no demand in the market because they know their money will get stuck. Taking lessons from this experience, the government could have earned about 1.60 billion rupees by withdrawing the exemption given to corporation tax. This would have saved her from being hit by the poor class tax.
But why tax
In fact, the kind of direct tax payment in the country is still very limited. Arun Jaitley once said that in this country five percent of people pay 95 percent of taxes, while 95 percent of people pay only five percent through indirect taxes. The government wants to incorporate this second major stretch into the tax network through indirect taxes. Today this tax rate is very low, but it is expected to increase the tax base class as it will cover all consumers in the country.
The government increased the tax-free income limit from Rs 2.50 lakh to Rs 5 lakh. This also led to a drastic reduction in the number of taxpayers. This also reduced the amount of direct tax, while now through this tax of five per cent it is expected that the same tax will be collected from all taxpayers in another way.
There are two main phases of an economy that are taxed. First production line and second consumption line. Taxing the production line means taxing the companies that do the work of producing it, but taxing them is a burden on companies and there is a possibility of diluting production. Economic experts think that it is better to impose a tax on the consumer’s line than this, in which the final consumer must bear the weight of the tax.