We have an obtrusive and overzealous tax bureaucracy, evaluating the dividends a taxpayer receives, the interest he gets on his fixed deposits and the savings in his bank accounts
Recent newspaper reports from an annual accounting list published by the State Department of the United States mentioned President Joe Biden and his family receiving tens of thousands of dollars as gifts from foreign leaders in 2023. What was eye-catching was the fact that the single most expensive present: a $20,000 diamond came from India. The 7.5 carat diamond presented to first lady Jill Biden was the costliest gift presented to any member of the first family that year. I do not wish to sound churlish and want to clarify at the outset that I am not against foreign leaders exchanging gifts with each other, but what is the need to be the first in the pecking order when it is the Indian taxpayer’s money that is being dished out so generously?
Equally serious is the cavalier fashion in which a Right to Information (RTI) Act query about the price of the 7.5 carat diamond was dismissed. In an answer to a query asking for the price of the diamond, the government responded by saying that disclosure of the price of the diamond would prejudice India’s relationship with the concerned foreign state. This response undoubtedly indicates that the government did feel internally embarrassed about dishing out taxpayers’ money in such a nonchalant fashion!
Taxpayers in India are indeed a neglected segment that is constantly paying either income tax on earnings or Goods and Services Tax (GST) for spending. The income tax payers are a mere 2.2% of the country’s population even though 6.68% of India’s population filed income tax returns in the 2023-24 fiscal, the balance reporting zero taxable income in the ITRs filed by them.
Constantly scrutinising this minuscule tax-paying population is an obtrusive and overzealous tax bureaucracy, evaluating the dividends a taxpayer receives, the interest he gets on his fixed deposits and the savings in his bank accounts and checking whether there are any other sources of income that have not been declared. A digital initiative named ‘DigiYatra’ that uses facial recognition technology to verify passenger identities at Indian airports was rolled out recently and has begun monitoring travel data to determine whether there is any way in which a taxpayer is avoiding paying tax to the government. Is it any wonder that scams like the ‘digital arrest’ swindle, where scammers pretend to be law enforcement authorities claiming to have a warrant for arrest and investigation, have spread tentacles in such a vicious manner fuelled by this climate of constant scrutiny?
Tax Indians pay on spending, the Goods and Services Tax (GST), is again all encompassing with a state GST (SGST) paid on behalf of the state, central GST (CGST) paid on behalf of the Centre and an integrated GST (IGST) for interstate transactions. After paying income tax on earnings, of the balance left for spending, GST ranging from 5% to 28% is further taken away based on purchases, be it ordinary bread and butter products, basic or fancy goods. Each time you visit a restaurant, the substantial GST payout makes it feel as though the government is also dining with you! Woe betide you if you want to invest the leftover income, it would get squeezed out further as capital gains tax ranging from 12.5% to 20% depending on whether one holds onto the investment for the short term or long term.
A tax-paying senior citizen without pension or salary finds his highest annual expenditure outgo is the income tax paid to the government. Though a few condescending concessions for senior citizens are made every now and then, most retirees find the income tax paid by them increasingly becoming a traumatic form of forced charity, which fetches nothing in return: no social security net, no post-retirement healthcare benefits. The pitiable state of most government hospitals compels taxpayers to depend on private hospitals in spite of their exorbitant charges with hospitalisation needed by senior citizens with advancing age resulting in major setbacks, the funds having to come out of the balance left out after paying government taxes. Travel and the Indian Railways rarely refers to an existing concession for senior citizen travellers that was abruptly struck off post Covid-19 never to be restored.
Agreed, gifting is part and parcel of diplomacy, but why is there no sense of proportion? Shouldn’t the government be sensitised to spending taxpayers’ money? Why is the Indian tax-paying public so passive without a say on how their money is spent? Why should a taxpayer have to depend on the US state department to discover how his money is utilised? After all the RTI Act was meant to access information from public authorities, shouldn’t this Act be used less cynically?
(Priyan R Naik is a Bengaluru-based columnist and an independent journalist.)
