Personal Income Taxation: Performance, Reforms, Incentives

After the introduction of Income-Tax Act, 1961, the professionals, the legal luminaries, various court rulings and frequent changes have made the income tax law a complex web difficult to be understood by an assessee. Various committees and commissions as also the general observations reflect that tax administration in the country has been very poor. Complexity of income tax laws coupled with various deductions, exemptions, rebates and relief with a motive to channelize the funds socially desirable sectors has on the other hand provided unscrupulous citizens a good opportunity for the exploitation of loopholes to their advantage. Further frequent changes engender lack of confidence in the minds of taxpayers, suggest the absence of sound policy on the part of the legislature and make the income-tax act a complex piece of document. Present study is an endeavour to evaluate personal income taxation in India in terms of its performance, reform and incentives. Performance of personal income taxation has been evaluated using revenue collections from personal income tax, its growth rate, arrears of personal income tax, rates of personal income tax, number of assesses, cost of collection, Tax-GDP ratio and, buoyancy of personal income tax. Also reforms in the area of personal income tax have been studied in detail. Further incentives available under personal income tax have been divided in two broad categories, i.e. social welfare incentives and investment incentives for the purpose of analysis. At the end of the book, useful suggestions have been made so as to review the personal income tax laws in the light of these recommendations.