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Paying Taxes in India

Of a total 178 countries surveyed, for ease of payment of taxes, India ranks an abysmal 165th in ease of paying taxes, while the island nation of Maldives has topped the list. Ease and efficiency is measured by 3 indicators, the number of tax payments, time taken to comply with tax obligations and the actual burden of tax.

An average Indian company, makes a total of 60 payments, and spends roughly 271 hours to comply with tax obligations. In India tax payment is very complex, where there are innumerable forms, that need to be first demystified and then submitted.

In Hong Kong, I used to spend a total of 10 minutes to fille my income tax form. In Sweden taxes are paid online and all taxes that include corporate income tax, value added tax, labour contributions and property tax are filled on a single form.

If laws are simple, compliance would go up drastically and enforcement becomes easier.

3 thoughts on “Paying Taxes in India”

  1. I guess the official stand is “lower the catchment bar so that the volume of folks within the tax bracket would offset the defaulters”. Wonder what stops the system from making the laws so brain dead simple that filling a form would not become complex ?

  2. The corruption vested interest has lot of incentives to keep the compliance complicated. Be it pollution control or food safety, keeping the laws strict and enforcement loose is the formula to perpetuate corruption.

    One way to ‘simplify’ is to recognize the ‘queue jumping’/non-compliance tendency officially by the system and charge nominally higher charges. Case in point is the ‘Taktal’ system in train reservation and passport office. Just 10 years back you need to ‘Know someone’ in passport office to jump the queue. Now you can pay for extra online and you are done.

    Some key figure like Amartya Sen or C K Prahlad must write an essay/book to bring the corruption, compliance nexus to focus and highlight the overall inefficiency it adds to the system.

  3. Yes offcourse indian laws & enforcement will take a lot of reforms to get back to a normal stage.
    Is seems like a nightmare to tackle with the government policies, laws, etc.
    But considering the population India has, the point can cerainly be considered that it will require firm structural changes.

    Regards,
    Sohan Dhande
    http://sohandhande.wordress.com

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