Often, we find during budget speech and other data analysis that only 3.7 crores Indians are filing ITRs in this poor country of 125 crore population as against 82 crore voters.

However, out of above 82 Crores voters or citizens, 75% are agriculturists i.e., 61.5 crores (You exempted them straightaway, but they can also buy cars, bungalows etc. as often quoted).

The balance remains 20.5 crores people of which 24% belong to the BPL class (Below poverty line). This means that 15 crore population is the non-agriculturist and non-BPL group. Of this, 75% of the population are senior citizens, non-working wives, unemployed youths, below-taxable income earners and the political class because in a typical Indian family, there is only 1 earning member and 5/6 other family members are dependent on him. Thus, the remaining (15-11.25) that is, 3.75 crores population forms the earning class, which can file ITRs and are already filing it.

Hence, there is almost no gap.

So, what can be done?

If country wants more people to come into tax net, then instead of foolishly resorting to rampant raids, surveys, notices, scrutiny, demonetisation etc., which are viewed as tax terrorism, Government can do the following:

1. Introduce simple Income Tax on Agricultural Income on large landlords (say 10 acres plus). We can then add 26% of agriculturists as tax payers (Politicians are also enjoying this exemption)

2. Instead of introducing 5000 /10000 penalties on late filers of IT return, it is better to come out with positive approach and introduce incentives to IT return filers (for example, in Pakistan, IT assessee gets discount in purchase of car).

3. Introduce Privilege card for those paying taxes above certain limit. Privilege card can entitle assessee with benefits like priority quota in railway tickets, use of airport lounges, subsidised medical facilities, etc.  We should make the tax payers feel proud.

4. Introduce medical insurance/life insurance on basis of average ITR filed like coverage up to twice of Gross Income in ITR filed for mediclaim and ten times risk cover in case of life insurance.

5. Introduce pension after 65 years of age on the basis of tax paid by tax payer during his working life.

Let honest taxpayers get certain direct benefits.

As of today, 3.30% of Indian population is filing ITRs as compared to 8% in China. Adding large agriculturists to Income Tax may shoot the figure to more than 10%. It may also help to cool down existing tax terrorism mind set and help in building a tax compliant nation.

Undoubtedly, we are concentrating on deepening the hole of the existing taxpayers but we also need to concentrate on widening the tax base through innovative means like bringing agricultural income in to taxation.