The revenue earned through the collection of income tax was about Rs 2 lakh crore annually.
The government could compensate the amount, which was levied mainly from middle and upper middle class, by yearly auction of spectrum and coal fields, he said while delivering a lecture on "Indian economy, past, present and future" organised by regional chapter of CII here.
"Moreover, the government can also get huge revenue by unearthing the black money stashed away abroad", he added.
He said he was against the proposal to hike FDI in insurance sector to 49 per cent.
Swamy said there is no need for an autonomous super regulatory authority to monitor the financial sector, as there were many authorities to look after various aspects.
As there was mechanism like RBI and SEBI in the sector, a super regulatory authority was not necessary for overseeing the financial sector, Swamy told reporters on the sidelines of the function.