♤ Widespread income tax evasion as evident by the fact that only 1.7% of the population paid income tax in 2015.-16.

♤ Inefficient tax administrative system, arbitrariness in deciding upon tax quantum of corporate, loopholes in Double Taxation Avoidance Agreement, multiple litigations involving corporate etc. have affected the revenue capacity.

NITI Aayog on rationalizing subsidies:

♤ Social subsidies should be reoriented so that people become economically independent rather than perpetually dependent upon them.

♤ Within revenue expenditure, subsidies have crowded out more socially relevant expenditures like education and health.

♤ Better targeting through use of socio- economic and caste census data.

♤ Doing away with production subsidies like cheap lands and other benefits to companies.

♤ Use of DBT in all the social welfare distribution schemes.

D. It is widely known that India’s subsidy system is highly inefficient and millions of needy people do not get their quota of subsidy.

Food, fertilizers and fuel (3Fs) are major

components of the union’s subsidy budget.

E. Increasing Tax Arrears to the tune of Rs. 5 lakh crores – the Government should make a determined effort to recover the huge income tax arrears. The total arrears amount to be recovered is stuck because of a variety of reasons like litigation, companies in liquidation, sick companies and untraceable taxpayers.

F. Corporate Tax Exemptions – Despite having a scheduled corporate tax rate, which is comparable with developed countries, the effective tax rate for the private corporate

sector in India continues to be low due to the myriad exemptions. The various tax exemptions that exist today needs to be rationalized.