Coming after a wait of almost six months, the Uni on Budget had kindled hopes in many breasts only to be dashed rudely by the Budget document. People who had set their sights on increasing their take home in come were left wondering whether they were better off earlier. This is a familiar happening; every year the Union Budget raises expectations to stratospheric levels, which are belied because for the Government, taxation is merely a source of revenue, not an instrument to distribute largesse. The Indian tax system was developed under the guidance of celebrated Hungarian-British economist Nicholas Kaldor, who advised no less than eight countries on tax policy.

Over the years, the holistic tax system envisioned by Kaldor has changed beyond recognition. Wealth-Tax Act, Gift-Tax Act and Estate Duty have been repealed, while the Income Tax Act has been amended beyond recognition. Consequently, the Income Tax Act has become exceedingly complex and iniquitous. Over the years, despite roaring inflation, minimum income liable to tax has remained almost the same, putting a great burden on the bottom tier of taxpayers. We have two taxation systems, the old regime and new regime, whi ch unnecessarily confuse small taxpayers, who cannot file their return without professional help imposing a considerable compliance cost on them. As far as businesses are concerned, manufacturing companies pay tax @ 15 per cent, most other companies @22.5 per cent but firms, who run small businesses are taxed at a flat 30 per cent.

This anomaly is reflected in tax collections for the first quarter of the current year personal income-tax collection was 65 per cent higher than corporate tax collection. Another anomaly is that col lection of indirect taxes, that are regressive in nature, affecting the poor and rich equally, is almost equal to that of the progressive direct taxes. Currently, GST collections are galloping so fast that the Government has dis continued publishing monthly collection figures for GST. More over, the structure of GST is complicated, with five rates of GST with some articles, like jewellery, being taxed at special rates.

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Most countries in the world have one rate for GST, some have two but only four-five countries have five GST slabs. Then we have VAT on petroleum products and alcohol.........

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