Demonetisation became the side story on Tuesday evening. The real story was reported in almost invisible columns in the dailies on Wednesday. What are we talking about? We are talking to the most deterrent tax law passed in our nation’s history. The Government amended the taxes related to concealed income. If one is found to have concealed his income, the regular tax laws and the discretionary penal powers in an officers hands no longer exist. Instead, we have a harsh tax structure that takes away 85% of the concealed income. In one stroke, the Government created the strongest disincentive to evade taxes. Why didn’t we make a big thing out of this historic move?
The answer lies in our ingrained cynicism about the system’s effectiveness. So we miss the woods for the trees. Bringing in such a law just before implementation of GST is a sign of what’s in store. The news could not get any worse for habitual tax evaders. And, it couldn’t get any better for tax compliant businesses. Clearly, we are en route to establishing the economic new-normal. The magnitude of even a great decision will still need to wait for its manifestation to show up.
“Greed, in the end, fails even the greedy.”- Cathryn Louis