Demonetization plays a Pivotal Role in Boosting State Earnings through income tax collection.
Demonetization plays a Pivotal Role in Boosting State Earnings through income tax collection.

After the implementation of the much anticipated 7th pay commission for Rajasthan employees, the state government is expecting a raise in estimated income tax collection for the coming financial year (2017-2018).

If the officers are to be believed, the tax collection will experience a surge since more taxpayers from the lower rung will enter the taxable bracket, with the introduction of new salaries. Simultaneously, the corporate world reports a 10% increase in employee salaries, compared to the last financial year. Thus, with the significant rise in income of both private and government employees across the state, the government is expecting an increase in the total taxable income. It means the govt. will be able to collect more taxes.

Why Salary Hike will Benefit Rajasthan Government?

For those who don’t know, the income tax collected from employees constitutes a large share of the central taxes. In 2016-2017, the total income tax revenue was Rs 7,463 crores. However, this revenue is expected to increase to Rs 9,578 crore in the upcoming financial year. Compared to previous years, where the surge was estimated as Rs 2,115 crores only, next year, the government is expecting a surge of Rs 3,505 crores.

The Government will Benefit from Increase in Corporate Taxes too

Most corporate companies file their annual returns with honesty. Only 52% of them show zero profits or losses whereas the rest 48% have a high annual turnover. Last year, the government collected Rs 10,739 crores as corporate taxes. Though marginal, but the share has risen by Rs 217 crores for financial year 2017-2018. With revised tax slabs, the government will collect up to Rs 10,956 crores from corporate taxes.

Demonetization plays a Pivotal Role in Boosting State Earnings

The authorities have recorded a major hike in the number of assesses post demonetization. The income tax department has imposed fines on late filing of returns and several people have borne penalties for exceeding the income capped for account deposits at banks. This has made people more vigilant in terms of tax payments.

Due to all these factors, the govt. is expecting an increase in I-T revenues for the coming year. Simultaneously, the authorities are requesting tax payers to pay income taxes so that they can use this tax money for public benefits.