New Delhi,Jan 3 (): BJP yesterday which gave shape to Vision 2025 has decided to do away with Income Tax and Service Tax if it comes to power. This decision will figure prominently on the BJP agenda for the 2014 Lok Sabha polls.
BJP feels that this could be a major move to woo the middle class,which moved away last time in 2009 and voted for the Congress. At a meeting on Thursday to finalize its blueprint for major financial structural changes in the taxation regime, BJP leaders agreed to do away with Income Tax and Service Tax. This comes when the UPA has offered an amnesty scheme after which offenders would face a jail term.
BJP’s Vision Document 2025 is in the process of formation and is scheduled to be released before the Lok Sabha elections. According to the UPA Finance Minister’s Budget proposals for 2013-14, Income Tax is expected to net Rs 2.47 lakh crore and Rs 1.80 lakh crore through Service Tax.
Income Tax is collected from individuals, firms etc. other than corporate companies. Securities in stock exchange and mutual funds pay transaction tax and also cess on various heads like education.
BJP also plans to bring taxation on petroleum products on par with international standards. Once the higher tax is curbed, petrol prices will come down to Rs 40-50 per litre. The proposal to abolish these two taxes was finalized at a meeting held at the residence of LK Advani. Sushma Swaraj, Arun Jaitley, Rajnath Singh, Nitin Gadkari, Yashwant Sinha and Subramanian Swamy were present in the meeting. This has the approval of PM candidate Narendra Modi.
A Pune-based institute has done the study and recommended abolishing these taxes to the BJP’s vision document committee. Gadkari heads the committee and Swamy is the convener.
The panel report says that there are 15 countries in the world, which do not levy income taxes on individuals. As per a study among 180 countries, India stands at 138 in tax administration.
There were certain doubts in the BJP camp about the financial loss over abolishing these taxes, but a consensus has arrived that the impact could be minimized by taking steps to mop up revenue and that would not pinch the common man much.
BJP leaders feel a certain amount of revenue loss could be recovered through banking transaction taxes and reform in the taxation regime. This step could mop up nearly Rs 40,000 crore. The vision document of the BJP would suggest changes in revenue collection methods by plugging leakages.