Boosting Government Tax Collection

Paper: III                                                                                             

For Mains: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Context of News:

  • According to the Finance Ministry data presented in Parliament recently, net direct tax collections contracted by 3.5 per cent to 8.13 lakh crore during April-February period of the current fiscal, while indirect tax collections grew by just 3.8 per cent to 8.75 lakh crore.

Details of Data Findings:

  • The government had collected Rs 8,43,582 crore as direct taxes and Rs 8,43,400 crore as indirect taxes in the 11-month period of April-February last fiscal. In percentage terms, the Centre now needs to collect 30.4 per cent of direct taxes in March, having collected 69.6 per cent of the year’s direct tax revenues during April-February.
  • Requirement now to collect Rs 4.67 lakh crore (Rs 3.56 lakh crore of direct taxes and Rs 1.11 lakh crore of indirect taxes) in the one remaining month of this financial year and given the economic slowdown and the economic impact of COVID-19 pandemic meeting the revised estimates for tax revenues for 2019-20 would be an uphill task for the Centre.

Recent Steps taken by government for increasing tax collection:

  • Indirect tax collections are faring slightly better with 11.3 per cent of the full year’s revised estimate needed to be collected during March, the data showed. So the problem is lying to the direct tax collection, government has taken various steps regarding the same:
  1. Government is working on steps like personal income tax rationalisation and another reform in GST to boost demand and economic growth. While government has already announced a slew of measures including a 22 per cent cut in corporate tax to boost economy, its effects are yet to have any impact on GDP growth.
  2. The government had cut its tax targets for 2019-20 while presenting the Budget for 2020-21. Direct tax target was revised down by Rs 1.65 lakh crore for FY20, while the estimate for indirect taxes was reduced by Rs 51,016 crore.
  3. The direct tax dispute resolution scheme, Vivad se Vishwas which was announced in the Budget last month, is expected to help the government bridge its revenue gap to some extent.
  4. The government said that it’s taking several steps including monitoring advance tax payments by top taxpayers to boost its direct tax collections.
  5. In order to maximise direct tax collection, the Income Tax Department is taking several steps including monitoring of advance tax payments by top taxpayers, recovery of outstanding demand, monitoring payment of tax deducted at source (TDS) by top deductors, organising awareness programmes regarding TDS/Tax Collection of Source (TCS) provisions for proper compliance.
  6. For indirect taxes, the Centre has taken measures to improve GST revenue such as GST rate rationalisation to improve tax compliance, mandatory e-filing and e-payment of taxes, penalty for delayed payment, extensive use of third party sources such as state VAT (value added tax) department, income tax etc. for compliance verification, regular enforcement and compliance verification of tax returns.

How Fiscal Deficit situation has Worsened?

  • There have been a slew of initiatives including demonetisation, the Goods and Services Tax (GST) and Insolvency and Bankruptcy Code (IBC). Over the medium to long-term, these ideas will play out for sure and get our GDP growth rate back to its historic highs. However, the immediate impact of these changes has disrupted the Indian economy.
  • These bold measures taken by present government has affected the supply of money to small and medium business enterprises. Challenged by the availability of resources, consumption has slowed down and this has had an inevitable impact on job creation.
  • In addition, the IL&FS issue has added to the crisis of confidence. Most NBFCs are being forced to cut credit to consumers even as they grapple with their own asset liability mismatch. Banks, both PSUs and private, are reeling from their own NPA issues from 2013-14 and continue to be extremely conservative, sticking to only high-quality credit.

Way forward:

  • Rationalization personal income:
  • One of the key reforms the government should working on is rationalisation of personal income tax rates.Rationalisation of personal income tax is one among many things that the government should be  working on in a bid to put money in the hands of people.
  • A reduction in personal income tax will hit government’s revenue collection initially, but the move would also provide citizens with more room to spend.
  • Rationalise GST Rates:
  • Another move the government should look at is streamlining GST rate structure. Rates will have to be eventually rationalised and added that the entire tax system has to be simplified. Intent should have to be three-slab GST.
  • Tax, is getting complicated because of this unstructured bringing down of rates. Another, it’s also getting complicated because you want to be sure that you’re doing everything correct, but ending up asking for so much more information in a technology-driven system.
  • As of now, there are four tax slabs in GST structure – 5 per cent, 12 per cent, 18 per cent and 28 per cent – excluding the exempted items that fall under 0 per cent.
  • Better Data Credibility:
  • There is an urgent need to bring credibility back to data. Several official reports on economic indicators were junked by the government on the basis of reliability recently.
  • Many economists including former Reserve Bank of India governor Raghuram Rajan has criticised the government over lack of available data on key economic indicators.
  • Finance Minister assured that the government is working to make sure that any kind of inappropriate methodology to calculate economic data will be addressed gradually.
  • So we will have to work towards better credibility, we have to work towards making available data without any obstruction.

 


Mocking Justice Delivery System

Paper: II                                                          

For Mains: Structure, Organization and Functioning of the Judiciary.

Context of News:

  • Three death row convicts in the December 2012 gang rape and murder case moved the International Court of Justice appealing for an urgent hearing to prevent the execution. The three convicts moved the petition through their lawyer calling the execution of death warrants illegal.

Background of Capital Punishment in India:

  • In three milestone judgments – Bachan Singh vs State of Punjab of 1980 being the last of the series – the Supreme Court laid the principle of “rarest of rare” for awarding death penalty to convicts found guilty of murder.
  • Three years later, the Supreme Court struck down Section 303 of the Indian Penal Code that made it mandatory to award death penalty to a person already convicted of some offence if she commits murder.
  • This establishes that the Supreme Court considers death penalty an avoidable sentence to the maximum extent possible.
  • In 2018, India was among top seven countries to award death penalty. The lower courts awarded death penalty to 162 convicts, according to Project 39 of the National Law University, Delhi. This is the figure quoted by the Amnesty International in its annual report on death penalty.

India awards death sentences to persons convicted of:

  1. Waging war against the State
  2. Terrorism
  3. Aiding or abetting Sati
  4. Aiding or abetting suicide by minor
  5. Falsely implicating an SC/ST person in a capital case
  6. Murder
  7. Rape/gang rape and murder
  8. Rape/gang rape of minor below 12

Reasons for moving ICJ for Justice:

  • Lawyers of these convicts in his petition mentioned the outbreak of coronavirus in Delhi stating, “That is also important to pertain here that due to burst air quality in the world and COVID 2019 (coronavirus) also in Delhi NCR and other states are facing medical emergency. Everyone is aware of what is happening in (the) world and also Delhi NCR in regard of water and air. Life is going short to short, then why death penalty?” the petition said.
  • The petition stated that the Tihar jail authorities were preparing the execution of the four death row convicts in a “hurried manner, such a hasty and secretive execution will be plainly illegal as above mentioned three convicts are yet to avail their legal remedy.
  • The death row convicts requested the ICJ’s help to “prevent this barbaric and inhumane punishment from being inflicted upon convicts; the death penalty has no relevance in a progressive and modern international era.

Grounds of Mercy Appeal:

  • In his/her mercy petition, the person concerned is required to state the grounds upon which he/she requests for the grant of pardon.
  • These grounds may not have any value in the eyes of law for exonerating the accused person from the offence, but they may play an important role in the release of the person by the President.
  • The grounds, such as the convicted person is the only bread earner of the family or the physical fitness of the convict, his age or even the law was quite harsh or the court by chance committed any mistake or error inadvertently, may be taken into consideration at the time of disposal of the mercy petition.
  • Supreme Court in Kehar Singh v Union of India, 1988 case reiterated its stand and held that the grant of pardon by the President is an act of grace and, therefore, cannot be claimed as a matter of right.

Need of Mercy Petition:

  • Scope of relooking:
  • Mercy petition has been one of the most debated and stressed topics in the arena of law and justice as they seek to offer a death row convict one last chance to seek reprieve after being found guilty of a rarest of rare crime by the top court of the land. A mercy plea is meant to give an additional safeguard against miscarriages of justice.
  • The provision for mercy allows for rectifying miscarriage of justice or doubtful conviction or errors of the legal system as a result of which the law can become a killing machine. It allows for rectifying errors in the face of a lawyers’ boycott and poor legal representation. It also allows for recognition of remorse and reformation, acknowledges the sanctity of life and recognizes that when the law kills, it sacrifices its own humanity.

Way forward:

  • In a development that would disappoint the whole nation looking for justice for Nirbhaya, the Delhi government and union government have differed hanging of rapists multiple times because of a mercy petition , state of mental status of these convicts and moving to further low is recent approach made by these convicts to ICJ.
  • The execution of their death warrants has been deferred multiple times so far due to delays by them in exhausting legal remedies. These convicts are using loopholes of our Justice Delivery mechanism and have made mockery of Justice Delivery system. There is need of urgent steps to ensure that such “mockery of justice” does not take place anymore.
  • Death warrants earlier issued then execution was later deferred due to various reasons; i.e. now deferring it any further would be sacrilegious to the rights of the victim for expeditious justice.