Government should reward individual taxpayer

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Every performer needs to be encouraged and incentivised. In different stages of life, these incentives assume different characters. In school, a pat on the back from a teacher in front of the class can work wonders. To a gallant soldier returning from the battlefield, a scroll of honour and a medal are cherished for a lifetime. The individual income taxpayer of India also has reached a juncture when the honest taxpayer needs to be incentivised in recognition of their achievement.

For the first time in 12 years, income tax collections surpassed the tax collected from the companies in FY21. While individuals and Hindu undivided families paid Rs 4.69 lakh crore in taxes, companies paid Rs 4.57 lakh crore – a good Rs 12,000 crore more than the corporates.

The pandemic might be one of the reasons. However, that has affected both the business of companies and the jobs and salaries of individuals. A more likely reason could be the Centre reducing the base corporation tax to 22% from 30%.

But whatever the reason, the government has every reason to reward the individual taxpayer who has contributed more to the exchequer at a difficult time than corporates, a handsome number of whom are making huge profits by cutting costs during the pandemic. The government has to reward the taxpayer and increase the tax net for shoring up revenue. For the past few years, there has been no revision of the income tax slabs.

It is, indeed, the age of the individual. As on the revenue side of the government, it is the individual investor who is shining in the country’s stock markets too. Just as the individual taxpayer has edged out the corporate sector, in the bourses too, retail investors have elbowed out institutional investors, both domestic and foreign, from the centrestage.

The government must push the forces that would lead to a democratisation of these markets.