Dear Sudhir / Deepak :
I hope you received my
yesterday's mail
To innumerable benefits that
ArthKranti has listed for abolition of Personal Income Tax , I request you to
consider the highlighted passages from my following blog
with regards,
hemen parekh
hcp@RecruitGuru.com / Mumbai / (M) 0 -
98,67,55,08,08
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Tuesday, 3
May 2016
For the year 2012-13,
Personal Income Tax paid by individuals is as follows :
-----------------------------------------------------------------------------------
( Number of Tax payers )
( Total tax amount paid - Rs Crore )
-----------------------------------------------------------------------------------
(
3
)........
( 437 )....
Super Rich
( 5430
)........
( 8,907 ).... Rich
( 14
Lakh )........
( 253,656 ).... Middle Class
( 111
Lakh )........
( 23,000 ).... Neo Middle ( Minimum Slab )
( 162
Lakh ).........
( NIL )....
Poor ( Tax Exempt )
-------------------------------------------------------------------------------------
( Total =
287 Lakh ).........( 2.86 lakh*Crore )
-------------------------------------------------------------------------------------
Now , I have repeatedly advocated
total abolition of Personal Income Tax
So , it would be natural to
ask :
If these people did not have
to pay personal income tax , then what would they do with this ( Rs 2.86
lakh*crore ) tax amount saved ?
MY
GUESS :
# 3 Super Rich
individuals
They might buy some more gold
/ ornaments / flats or take more holidays abroad
Of course , the expenditure
for the purchase of flats and ornaments will help the economy
#
5430 Rich persons
Some of them would also indulge
in buying gold / flats
Many would buy luxury cars /
luxury goods ( Consumer Durables , like domestic appliances or Consumables like
expensive clothes / ornaments / purses etc )
All of this expenditure will ,
no doubt , help the economy grow and create more jobs
#
14 lakh Middle Class persons
From the above data , it is
obvious that it is this Middle Class persons ( 14 lakhs ) , who bear the brunt
of the Personal Tax collection !
And , as Rajiv Gandhi once
said , for every rupee of tax that they pay , only 15 paise worth of "
Civic Services " ( infrastructure / drinking water / health-care etc
), returns to them !
And , on top of everything ,
they have no " Social Security " of any kind !
So , I believe that they
would invest the saved tax money in bank fixed deposits / mutual funds / life
insurance / Public Provident Fund etc , to ensure a small - but steady - source
of income after retirement
Now , if Rs 2 lakh*crore of
this tax saving were to become " Bank Deposits ", it would enable
these persons to raise their " Credit Rating / Loan Repayment Capacity
" and take out bigger loans for homes / cars etc
This would give a huge boost
to our economy !
That would also raise our
Domestic Saving Rate , once again , above 30 %
That would also relieve some
pressure on the Government to introduce a forced " Pension Regime "
And , if this group spends
some more money in sending their girl-child to better schools , they would be
investing in a better future of their children - a highly desirable type of
expenditure !
And do not discount the long
term social impact of investing for retirement
In most middle class Indian families
, parents today depend upon their SONS , to look after them in their old age .
Male child is THE only retirement assurance for these people
When tax savings make it
possible for them to become independent of their male child , the desire to
have a male child ( at the cost of aborting a female child ) , will go down !
# 111 lakh , Neo
- Middle Class persons
They have just entered the
minimum tax slab ( 10 % ? )
Without doubt , they would
spend the saved tax money in buying items of daily NECESSITY - food being the
foremost ! May be some cheap clothes !
By being able to meet the
Cost of Living a little better , these persons would be able to live a
dignified life - even if living in slum-like conditions !
Their tax-saving would just
not be enough for them to book a 250 sq ft flat !
And since there would be no
Personal Income Tax to be paid, no one would want to hide any income ! Every
rupee of income would get accounted for in official banking channels !
Other than small daily
purchases , large CASH payments will disappear !
Official payments ( through
electronic transfer / credit cards / mobile wallets etc ) will dramatically go
up !
Banks will get huge amounts
of deposits and be in a position to engage in micro - lending !
P2P lending platforms will
take off like a rocket ! Especially those " RICH " and the
" SUPER RICH " will now start lending to Start Ups and Self Employed
Entrepreneurs , through this P2P web sites
I request Shri Arun Jaitleyji
to seriously consider my suggestion in the forthcoming Central Budget
I am confident that not a
single Political Party will oppose this , either in Lok Sabha or in Rajya Sabha
It will be a political "
Harakiri " for anyone to oppose !
-----------------------------------------------------------------------------------
www.hemenparekh.in / blogs
04 May 2016
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