Taxation Dilemma Essay

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CASE STUDY Strategic Issues in Public Management and Policy Taxation Dilemma: Strategy for Unsought Services!(Abridged) 1.0 Introduction Ashok Kumar Sinha, Director in the Central Board of Direct Taxes was looking at the report on number of income tax assesses lying in front of him. He took some solace from the fact that number of individual assesses declaring taxable income of more then Rs. 10 lakhs per year has more then doubled from about 54,000 in the year 2000-2001 to about 1.27 lakhs in the year 2006-07. (Refer to Exhibit 4). However, he was wondering how many of the potential assesses are really there in this category? This brought him to the current issue on hand which was slated to be discussed in the Board Meeting tomorrow and a brief for which was under preparation “Individual tax payers – Strategy for widening the tax base vs. deepening the tax base.” To have a fresh and more comprehensive perspective on the issue at hand, he called his Under Secretary, Sunil Kumar, a young IRS officer with an Economic Honors and MBA degree who has recently been posted to the Central Board of Direct Taxes. Both of them started discussing the issue at hand. Both of them realize that India has a relatively narrow tax base which has been a cause of concern for policy makers. Until a few years ago, the percentage of tax-payers to the total population was hovering around one percent and this had been widely criticized. It has now slowly increased to around 3% of total population. Such a low percentage of tax paying population does not compare favorably with the corresponding statistics of the developed countries. It even does not compare favorably with some of the fast developing Asian countries. This proportion varies anywhere between 10-30% of the total population in developed countries. Sunil Kumar enthusiastically pointed out

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