Reducing Tax Evasion

Tax evasion is a tendency not to pay taxes. People try to escape from taxes because they think the government is charging more taxes and that the tax revenue will go into the pockets of Government officials. Government has to take measures to reduce tax evasion especially from highly rich industrialists and feudal lords.

Improve Taxation Structure

The present taxation structure is very complex. People try to hide away from tax authorities because they think that Government will take a large part of their income. They give bribes to the auditors and income tax officers and pay less taxes. Government has to simplify procedure for tax calculation and collection so that the trust of people can be achieved and tax base can be increased.

Increasing the Tax Revenue

Taxes are the government's primary source of revenue. Government earns 70% to 80% of its revenue through taxes. But, it is a fact that only 10% to 15% of the population pays taxes. If Government can increase its tax base, it will generate more revenue through which it can match expenditure.

Relaxation of Taxes

The following relaxation in taxes has been provided by the government in the above mentioned industries.

1. Allowances to charge high rate of depreciation on plant, machinery and building.
2. Provided rebates on different occasions.
3. The relaxation in taxes for expenditure on scientific research.
4. The reduction in duty on the import of various raw materials, plants and machinery etc.
5. Income Tax incentives and tax relaxations to start a factory in a less privileged area or locality.