Tax Evasion

– Kalyanaraman TR, JOINT SECRETARY
Sankara Institute of Management Science

Today, on this blog, I will be discussing few reasons why majority of earning citizens of India indulge in tax evasion and whether these reasons are justifiable.

First and foremost, the obvious reason is to accumulate more wealth by avoiding paying the required tax amount to the government. This unaccountable fund becomes black money and majority of this source of funds are deposited in overseas banks, it is also used to purchase wealth, and also the money is safely secured and is stagnated for years, and is used when the need arises. This motive of tax evasion for wealth accumulation, I am assuming are majorly done by the citizens who have yearly income of more than 10 lakhs.  Also as per one of the media source, only 24 lakh citizens of India have declared that their earnings are more than 10 lakhs per annum, this number is staggering.

Secondly, many are of the view that, the Government doesn’t provide any basic facilities with good standards to the public, and hence, they feel that they have no reason to pay the tax, as their tax money is misused for corruption.  They feel, most cities in India, Government hospitals do not have the same high end facilities as private ones. Also similarly, government schools are only considered for people under poverty line. Also few argue that Government even fails to provide basic security in their neighbourhood, and hence, they hire their own security guard to safeguard their homes. Moreover, it is argued that, in most developed countries, Government hospitals, schools, have better infrastructure and facilities than private ones, and everyone gets basic medical insurance for free. Also an adult unemployed citizen in most developing countries gets monthly grant until they find an employment. These are the reasons why in developed countries, tax evasion is less compared to developing countries that provide substandard facilities.

On the contrary, many  believe that it is duty of every earning citizen to pay the required tax,  as every citizen is still using some basic government services or facilities,  irrespective of whether the government  is providing the service  at international standards or not. Also many freebies and subsidies are provided by the government including the ration facility, with the help of the tax money. Hence, I also agree to this view and sincerely hope that within few years,  government will start providing facilities that are even better than the private sectors at free or nominal cost, until then let’s keep doing our basic duty as a citizen of this great country.