Ever since countries like Bermuda, Monaco, the Bahamas, Andorra and the United Arab Emirates (UAE) removed the income tax provision from their, a lot of people in India have been contemplating about an income-tax free India. Though the thoughts are really alluring, let's try and find out the possible consequences if income tax be abolished in India.

  1. The cost of Writing off the Taxes will be Higher:

Though people won't have a problem if the government decides to eliminate income tax policy from India, experts believe it won't be a feasible option. The existing taxation in India is a robust system. Here, each individual pays the income tax on his/her ability. Many economists believe the revenue generation system would be difficult to manage if the income tax is abolished from India. Besides, the Government will need to make up for the losses, and it could be disastrous.

  1. Countries who have Abolished Income Taxes are Rich:

What inspires people to believe abolishing Income tax from India can be a good step? The answer or the source of inspiration for such bold thoughts would be the income-tax free countries such as UAE, and other arabian countries who earn most of their revenue through oil-trading.
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The countries which have already abolished income-tax mostly have other ways to generate revenues or their population is less. Thus, if India takes a cue from these countries and abolish (even decides to abolish) income-tax from the country, the decision would be anything but wise. It would have to take a reference from countries such as China which is similar to India in almost all aspects. You may read more about Should India Write Off the Income Tax? Here.