1. Reduction in the tax rate - The prevalence of high tax rates is one of the major reasons for tax evasion, as it makes tax evasion profitable and attractive in spite of the attached risks. Hence it is necessary to maintain, tax rates at reasonable levels.
2. The practice of being too through in small cases where no worthwhile revenue is involved has done much damage to the image of the department in the public eye Hence the department should create confidence among tax payers. (Should target medium and high
level cases when there is potential of recovering tax evaded, where benefit outweigh cost).
3. There should be regulation of donations to charitable organisations. Donations escape tax liabilities in the hands of recipient, in place of donations, charitable institutions should be provided with reasonable grants and have their accounts audited and published annually.
4. Review of penalties imposed, in order to put in place penalties that will deter tax payers from evading tax, as the cost of evasion will be higher than the tax evaded.
5. Public opinion – The public conscience should be aroused against tax evasion and tax evaders should be ostracised by the society. This is only possible when the public is convinced that tax evasion is anti-social.
6. Vigorous prosecution – The department of tax should completely re-orient itself to a more vigorous prosecution policy in order to instill a wholesome respect for the tax laws in the minds of tax payers. Where there is a reasonable chance for securing a conviction, the tax dodger should invariably be prosecuted.
7. Continuous training of tax officials on emerging modes of evasion.
8. Enhance usage of information communication technology to record, monitor and trail transactions.
Wilfykil answered the question on February 15, 2019 at 05:38
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