I. GOVERNMENT WASTE :

The Supreme Court of India, in case of Commissioner of Wealth Tax-II, Ahmedabad Vs. Arvind Narottam reported in 173 I.T.R. at page 487, Mr. Justice Sabyasachi Mukharji has observed. "It is true that avoidance in an underdeveloped or developing economy should not be encouraged on practical as well as ideological grounds. One would wish, as noted by Reddy J., that one could get the enthusiasm of Justice Holmes that taxes are the price to buy civilization, and one would like to pay that price to buy civilization. But the question, which many ordinary taxpayers very often, in a country of shortages with ostentatious consumption and deprivation for the large masses, asks is, does he with taxes buy civilization or does he facilitate the waste and ostentation of the few. Unless waste and ostentation in Government spending are avoided or eschewed, no amount of normal sermons would change peoples attitude to tax avoidance."

An assessee will be inclined to pay tax provided the Government reduces waste in spending revenue receipts, which the taxpayers have paid.

II. PENSION SCHEME ON PAYMENTS OF INCOME TAX:

We have seen in earlier chapter that citizen of U.S.A. contributes 8% of his income towards social security, as soon as he starts earning and every citizen practically contributes. Income-Tax limit is $7,000 per year and poverty limit is $17,000 per year. A citizen of U.S.A. contributes 8% of his income towards social security and start getting pension at the age of 65 and also gets unemployment allowances on certain condition. The writer has suggested such a scheme in the chapter of income-tax rates, which can encourage an assessee to pay tax honestly, if such a scheme of pension is introduced.

III. EVERY ASSESSEE SHOULD BE TREATED EQUALLY :

Every assessee will be inclined to pay tax provided every citizen and every type of income is subjected to tax. It may be in some cases at a very nominal rate of tax, in case of certain Institutions and Trusts.

Dr. Raja J. Chelliah had recommended to tax allowances of MLAs and MPs, but the said recommendations has not been carried out of till now. The allowances of the Ministers and the Hon'ble High Court Judges are not taxable and number of allowances are given free of charge and they are not treated as perquisites. The assessee will pay his tax honestly provided he is assured that every one is treated equally in payment of tax irrespective his post or position and every one has to pay tax on receiving benefits from the Government.

IV. REFUND OF TAX :

People do not pay tax as refunds are not given in due-course, and one has to make an attempt legally or illegally to get the refund. The Department should classify the refund cases, decide the cases urgently and pay the refunds to the assessee. As assessee will be inclined to pay his tax-due. The Central Government can save about Rs.1,500 crores to Rs.2,000 crores. Which the Department pays as interest-payment to the assessee, if refund cases are treated urgently. The interest-payment to the assessee can be saved by the Government, if refund cases are decided on priority bases.

V. ESTABLISHMENT EXPENSES :

In every country and U.S.A. and other Developed Countries, Pay Bill is between 8% to 10%. An assessee is not inclined to pay tax because he knows the amount which he has paid is spent by the Government on allowances of Ministers, Ex-Ministers, MP's and Ex-MLA & MPs, who get everything free of income-tax. The assessee knows that Pay Bill of 38 lacs Central Government Employees has gone to the extent of Rs.33,000 crores per year, and Pension Bill has increased from Rs.3,271 crores in year 1990-1991 to Rs.24,000 crores in year 2002-2003 (estimated), which is non-contributory.

In U.S.A. an assessee is supplied with the copy of the Annual Report on the United States Government. The copy of such report issued in year 1999 by the Mr. Christopher Cox, Chairman of the House Policy Committee of the United States is reproduced in the next chapter, which gives the statements of revenue and expenditure of the Federal Government of America. Pay Bill of employees is only 9% of receipts. A citizen will pay provided revenue receipts are utilized properly and he is assured that he will get pension at the age of 65 years as he has paid tax honestly.

WASTEFUL EXPENSES :

The wasteful expenses of the Central Government and the State Government are enormous and separate book is required to enumerate them. Due to delay in implementation of projects, costs of the project increases.

TAX RATE IN OTHER COUNTRIES :

1. In China, basic exemption is Rs.2,815, minimum tax rate is 5% and maximum tax rate is 45%.
2. In Malaysia, basic exemption is Rs.31,000 and the maximum rate is 28%.
3. In U.K., U.S. maximum rate of tax is 40% and 38.6% respectively.
   
   Considering the above figures, exemption limit of Rs.60,000/- and tax-rate of 10%, 20% and 30% are quite reasonable.
   
   
4. Deduction of tax should be only 5% and not 10%. The assessee will have enough monies to spend during the financial year.
5. For senior citizen, exemption limit can be Rs.1,20,000/- and tax rebate u/s.88B of Rs.20,000/- should be deleted.