RBI Issues Circular On Levying Unfair Interest Charges On Customers

Honest taxpayers are the dream of every finance minister. To a significant extent, they decide the financial feasibility of most welfare schemes that the government considers. Welfare schemes, in turn, substantially decide the popularity of the government, shape the contour of a welfare state and eventually the happiness quotient of a large part of the population. If honest and conscientious taxpayers exist in sufficiently large numbers, they allow the government to carry out the redistributive role to the full. They also help a government to reduce its excessive dependence on debt, which, despite being an essential part of state finance, can also create fiscal stress that has far reaching outcomes including downgrading of a country’s sovereign rating. In short, honest taxpayers can shape a country’s future on a number of crucial parameters.

It is a matter of delight that tax revenue collection is rising in the country both in direct and indirect taxes and even during the savage second run of the virus. In this financial year, direct tax collection has been as high as 100.4% as on June 15 this year. Even in Covid-hit FY21, net direct tax collection displayed an upswing.

It is heartening to see Union finance minister Nirmala Sitharaman congratulating honest taxpayers and saying their contribution needs to be recognised. The crucial point is they also need to be rewarded. The income taxpayer has been waiting for some time for a downward revision of the tax slabs.

The past 18 months have been horrible for everyone. Jobs were lost and income shrunk more than ever before. To revive the economy from the shock, consumer spending is one of the medicines all-economy doctors prescribe. If the tax slabs are brought down, it would put more money into the hands of the common man who would spend it on different goods and services. Equally important, reduced rates would also encourage more and more people to pay taxes, boosting the collection further.