Single Slab 10% payable by Employer and Employee Both

 Respected Sir

20 per cent and 30 per cent Tax on Income are not advisable, as higher income groups may consider it painful to pay high taxes and there are chances that they may opt to evade taxes in one way or the other.

Well, Income Tax may be considered to be charged at a single flat rate of 10 per cent on total Gross Income as TDS just like a Service Tax only, the minimum.

 However, this 10 per cent Income Tax amount on total gross income may be borne by Employer and Employee in the following ratio and amount:

The implementation of the above System of bearing the tax burden both by the Employer and Employees may be considered as an effective tool for reducing the tax liability on employees (individuals) and reduces the chances of evasion of Tax by Employers, as sometimes, employers show inflated/bogus/more salaries in their accounts to reflect less income or profits. 

Moreover, Government may consider reduced/lower single slab Income Tax rates i.e. 2 per cent, 4 per cent, 6 per cent and 8 per cent on  Total Gross Income upto 50,000, 1,00,000, 1,50,000, 2,00,000 respectively, in the form of TDS for lower income groups, which is to be wholly borne by the Employer, instead of Employee.

However, people below the poverty line may be given exemption of this 10 per cent Tax.

            Incomes of All small firms, different businessmen, wholesalers, retailers, Actors, Musicians, etc. may be considered to be charged at a single flat rate of 10 per cent either it is  25 lacs or 50 lacs or more.

            Spiritual organizations, Charitable Institutions, Clubs, Welfare Organizations etc. may be considered to be liable to Pay Tax at a single flat rate of 10 per cent on all incomes/donations/receipts.

Incomes from 1.  Interest 2. Dividends 3. Short / Long Capital Gain 4. House Property may be considered to be charged at a single flat rate of 10 per cent as TDS just like a Service Tax.  However, people below the poverty line may be given exemption of this 10 per cent Tax.

            Initially, Income Tax of single flat rate of 10 per cent on total Gross Income as TDS may be considered to be applicable for employees of Government, Public Sector Undertakings and Public Limited Companies.  Its scope may be further extended to Private Limited Companies, then small firms, then different businessmen, then wholesalers, then retailers and so on.

Wealth Tax may be considered to be abolished.

STT may be considered to be allowed to be continued and may not be considered to abolish the same.

One new Tax on trading of Shares in the Stock Market may be introduced i.e. 0.001% on delivery and 0.0001% intra-day, which will go into the pockets of individual companies, whose shares have been transacted or traded, proportionately according to their volume of transactions.

When all the incomes are charged at a single flat rate of 10 per cent, then ultimately, the revenue from Income Tax shall definitely be manifold.  Then there are chances of less Tax evasion, less burden of filing returns.  

All investments and purchases should be free from any compulsion in liberalized economy and as such, all Tax Saving Investment Schemes may be considered to be abolished.  People should decide its own priorities for purchases and investments with 90 per cent amount available at its disposal - after paying 10 per cent Income Tax.  Then People shall have the option either to invest the savings or purchase some more items/things out of the savings. In both the cases, the Government will earn revenue either in the form of Tax on interests/Dividends or Tax on Excise/Sales Tax.

The implementation of this single flat rate of 10 per cent Tax on Total Gross Income may be considered to be an effective tool for overcoming recession and will definitively increase production, employment opportunities and investments, in addition to reduction of black-money, un-accounted income and tax evasion.

Please acknowledge receipt.

With regards

 Bobby