Way forward

♤ Reduce corruption in tax administration to increase legitimacy of the state. This would motivate people to pay their dues.

♤ Improve tax administration to make tax compliance easier.

♤ Need for widening the tax base.

♤ Explore the possibility of taxing the property tax in urban areas which has not been explored fully till now.

♤ Do not raise tax exemption limits so frequently.

♤ Swift implementation of big tax reforms like GST, GAAR etc.

♤ Promoting cashless and digital transactions.

♤ Creating awareness among consumers and establishments regarding tax discipline.

The Indian state is fiscally constrained thanks to inadequate direct tax collections. The solution is neither a sharp increase in tax rates nor a carefree disregard for fiscal imbalances. The way ahead has to be based on further tax reforms combined with better tax administration, so that more Indians pay income tax.