On Fri, 14 Mar 2003, Sanjeev "Ghane" Gupta wrote:
> LinuxLingam wrote:
> > i am suggesting:
> > i) keep the excise on OEM
> > ii) go ahead, charge all software for excise.
ok,
i am going to wade into this discussion. but only a bit.
(btw, ghane, you should consider changing profession. maybe advisor to
finance ministry?!)
<bit>
excise, customs etc are all "indirect taxes". at one time these used to
constitute almost 85% of all tax revenues in India. one measure of how
developed we are, is the proportion of taxes that come from direct taxes
(i.e. corporate and individual income tax). with passage of time, the
proportion of indirect taxes has been falling (and not just because of
WTO), but there hasn't been commensurate increase in direct tax
collection. that's why india's tax to gdp ratio has been falling, and is
already pathetically low compared to most economies.
however, the remedy to this is not to re-introduce excise on all sorts of
new things - like software. instead the effort should be toward more
efficient direct tax collection - from income earners - whether they are
software engineers or farmers. this doesn't mean increase the rates - just
widen the tax net. after all we have 75 m TV sets, 45 m phone connections,
but only 28 m tax payers. (and mind you, a TV and phone is generally
associated with a house - not a person.)
</bit>
cheers!
ajit
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