There are two types of Indians: those who pay personal income-tax and those who don’t. The latter are in a huge majority, as only around 55 million of the 1.3-billion pay taxes. In a carrot-and stick move, the government is trying to make the most of its September 30 deadline to convince black money hoarders that it’s better to reveal hidden income. Coming clean was best, said both Prime Minister Modi and finance minister Arun Jaitley. The question is: will the threats of sending evaders to jail after the deadline force the hands of non-payers?
Given Indians’ record of cheating on taxes despite several voluntary income disclosure schemes, it remains to be seen if the response will be positive. Mr Jaitley noted India has “extremely moderate income-tax rates” compared to the developed world, but then those nations offer citizens free medical care and a comprehensive social welfare net.
Traditionally, real estate, jewellery and filmmaking are among the businesses run on cash for so long that it is difficult to change things overnight. It’s the salaried middle class who is forced to be 100 per cent honest, while the needle of suspicion points at everyone else. Also, cheating on taxes is a game played for years by Indians who have perfected the art of evasion. It may take more than jail to make Indians honest.
