Scrapping income tax will not be easy: Arun Jaitley

NEW DELHI: Amid talk in his party for scrapping income tax and some other taxes, senior BJP leader Arun Jaitely today suggested that such a proposal will not be easy to implement considering federal structure of nation.

"..In the current political scenario, federalism is at centre stage..when we start collecting taxes at one point, it will be a challenge for the Centre to make states understand that it will lead to increase in tax collection and there rights will not be hurt," Jaitley said.

The discussions on this proposal needed to be taken to states as the present environment in the country was of coalition politics and "states do not have trust on the Centre," he said.

However, earlier another BJP leader Nitin Gadkari had favoured abolition of income, sales and excise tax and in place of that levy transaction tax, and said party may include it in its vision document to be unveiled ahead of general elections next year.

"If we abolish these taxes and if we apply around 1 or 1.5 per cent of expenditure or transaction tax, then we will get revenue to the tune of around Rs 40,000 lakh crore," Gadkari had said.

Terming the proposal to replace income tax and excise with a single tax on banking transaction as "attractive", Jaitley said there are several questions which have to be answered before it is implemented.

He was commenting on a proposal of yoga guru Ramdev to replace all the existing taxes, including income tax, excise and other levies, with a single Banking Transaction Tax (BTT).

"..At present, society is distraught with excessive taxation, complex taxation and Inspector Raj and that's why this proposal looks attractive, but there are many questions in implementation of this. After that, it (has to) be taken to different political parties, states and experts," Jaitley said.

He was speaking at a seminar organised by Institute of Chartered Accountants of India on 'Simplification of Tax Laws in India'.

At the seminar, Ramdev put forth his proposal for a single tax -- Banking Transaction Tax -- in place of direct tax (income tax) and all indirect taxes -- excise, customs and sales tax.