In present times, focus of Govt. Agencies is mostly on big
ticket transaction only. But this type of policy measure makes normal person
wary of it and then they try to conceal of it. Right now, there is no
inducement for them to use proper channel to complete their transactions. If
they use proper channels, then revenue generated will be included in our
economic statistics.
We can induce the person spending him money to pay through
banking channel.
For example gave tax payer deduction of say maximum of Rs.
500 per month per dependent for his milk expenses provided he buys through
check, credit card, or any other mode which can be easily monitored.
Tax payer should be
rewarded for using banking channel for his purchases on groceries, clothing, and
payment of services as well.
There are many
services which normally are not accounted for like house painting, marriage
expenses, apparel, footwear, education (that included private tuition fees),
traveling, etc.
Since Govt will
surely earn on VAT for these items so they can surely gave incentive to the
purchaser as well.
However Government can create rules for it. Like setting of
some range for which deduction in income will be provided or only a percentage
of the expense will be allowed to be deducted.
Since the returns are now electronically uploaded than we
can ask from him his invoice details as well like TIN, etc. There is no need
for asking him physical copies of it.
The seller will have to make suitable return of his sale to
avoid taxes. In fact gave him tax
allowance only if he pays through banking channel.
Not only this will shrink our black market economy but it
will also help in reducing the dependence on currency as well. This also is a
very big problem on our country where counterfeit currency is rapidly
devastating our economy.
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