Tax deduction at the destination to prevent corruption.

Currently, the payer is the one who pays tax at the source, and the receiver has the privilege to evade tax in most cases. This encourages corruption, thus leading to lesser tax revenue for the Government. What if banks deduct tax at the destination? Let us discuss the benefits of it below.

• A simple global software change in all banks can facilitate this without hassle.
• Governments don’t need Income Tax Department anymore because banks take care of tax deductions for every transaction at the receiver’s end.
• When someone transfers a massive amount of black money to one’s account abroad, then tax is deducted by the foreign bank. This will discourage money laundering and corruption.
• Since many people will pay taxes through the bank, the tax rate can be reduced drastically to benefit the ordinary person.
• People will be encouraged to pay third-party electronically to ensure tax payment at the seller’s end.
• Even the Corrupted will be paying taxes indirectly with their bank transactions. They can only evade this with cash transactions, so we should move towards a cashless society.

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Originally published at www.vasanth.co.in.