A Large Number of People Outside the Tax Net:A Study on the Street Vendors in Kolkata

Objectives: To understand the modus operandi of the street hawkers and analysing the impact of these operations on the revenue of the Government due to non-payment of taxes.

Methods/Statistical analysis: The study is prepared using primary data. The methodology followed is by conducting survey of 200 street hawkers from 8 prominent street hawker markets of Kolkata by way of predefined questionnaires which included quantitative questions. The statistical tool used to analyse the data are pie charts, histograms and arithmetic mean. The primary assumption taken is that the data is uniformly distributed thus arithmetic mean could be applied appropriately.

Findings: The study addresses the issue of government revenue loss due to the power conferred by the Income Tax Act to the persons earning income from Business and Profession. The street hawkers are perceived to have very low income but to the contrary of popular believe a significant section of the street hawkers earn more than basic exemption limit of Income Tax. However these street hawkers never pay taxes or file return thus these incomes are never reported consequently leading to huge revenue losses to the government. The revenue loss of the government is on account of 3 heads: Income Tax, Indirect Taxes and Licensing fees, this revenue is distributed among the state and the central government. The other issue resolves around the rampant corruption associated with the street hawkers operations, as per the findings of the survey it was found that around 1-2% of the total revenue of the street hawkers is paid to police or government officials and political leaders to be allowed to operate on the streets.

Application/Improvements: To minimise the revenue loss the Government can implement the Presumptive Taxation Scheme for Income Tax and Composition Scheme for Indirect Taxes for the street hawkers on turnover.