What would happen ?
============
What would happen if Personal Income Tax was totally abolished ?
Before answering that question , let us
refer to what Shri Jaitleyji told the Consultative Committee attached to the
Finance Ministry , yesterday :
·
The number of tax payers rose to 6.26 crore in 2016-17 from 4.72 crore
in 2012-13
·
·
The revenue collections in case of Direct Taxes rose to Rs 8.5
lakh*crore during 2016-17 at a growth rate of 14.5 %
·
·
1100 searches were made from Nov 9 2016 to Jan 10 , 2017 , resulting in
seizure of Rs 610 crore including cash of Rs 513 crore
·
·
Undisclosed Income of Rs 5,400 crore was detected and about 400 cases
referred to the Enforcement Directorate and the CBI for proper action
·
The government is committed to widen the
tax base by encouraging and incentivizing the NEW TAX PAYERS
So , from this , one thing is obvious
Government will need to forego a revenue
of Rs 8.5 lakh*crore if Personal Income Tax was abolished – something very
measurable
Followed by a question :
In such an event , from where would the
government find the money to finance all its Infrastructure
Development projects ?
What may not be so obvious to the Policy
Makers is that , such a BOLD / UN-ORTHODOX
/ OUT-OF-THE-BOX , step would set in
motion a VIRTUOUS CIRCLE , where
following things will happen :
* There will be no
incentive for tax evasion / avoidance
This will be a permanent FULL STOP to future generation of Black Money
This will be a permanent FULL STOP to future generation of Black Money
* With NIL personal tax
to pay , all the cash ( black money , no doubt ! ) ,
lying in bank lockers , will get deposited in official bank accounts , within
one year
lying in bank lockers , will get deposited in official bank accounts , within
one year
* All payments
will be received by cheques and deposited in Bank Accounts
* All stashed away Black Money will , somehow , on its own , find its way in bank
accounts,
- including Black Money lying in Foreign Banks , making SIT redundant !
* Savings rate will go up dramatically
* That will lead to greater purchasing power for all people
* Leading to higher domestic consumption of FMCG / Consumer Durables
* This will result in huge collection of GST , offsetting revenue losses
* Demand will go up , boosting manufacturing
* With rise in manufacturing , sub-contracting / outsourcing will increase , giving a big
boost
to MSME sector
* If manufacturing goes up , employment / self-employment , will go up
* For a change , we as a Nation , will learn to celebrate ,
# Wealth Creation as a means to reduce poverty
# World-size Companies to take on the World
* There will be less pressure on demands for higher salaries / wages
* If salaries / wages do not rise , inflation will ease
* Cost of manufacturing too , will go down
* Era of " Low Cost Economy " will set in ( VIRTUOUS CIRCLE ? )
* Savings will move from gold / land to Financial Assets
* With a low cost structure , our products / services will become , internationally
competitive
and exports will go up
* That will improve our current negative Trade Balance / CAD
* This ( abolition of Personal Income Tax ) MUST be coupled with SPVs for :
# Infrastructure Projects ( especially Smart Cities / Corridors etc )
# Educational Institutions
# Skill Development Institutions
# Health care Facilities
# Solar Power ( Eqpt Mfr / Generation / Transmission / Distribution )
# Digital India ( Broadband ) Network
No questions must be asked as to the source of money invested in such SPVs
All income ( Corporate Income or Personal Income by way of dividends / interests etc
)
arising out of investments made in such SPV , must be tax-exempted
SPVs , themselves , must not need to pay any taxes for 10 years
Take away incentive to evade taxes ,
thereby stopping future generation
of Black Money
* Channel all existing Black Money (
locked up in assets , in India or
abroad ) into the main
stream of economy ( Infrastructure Building )
* Enable current annual inflow of
inward remittances from overseas
Indians to go up from $
70 Billion to $ 700 Billion
* Through rapid development of
Infrastructure , generate Self
Employment for 12
million youth every year
* Drastically reduce FDI requirement
for rapid growth of economy
* By cutting down on government outlay
for Infrastructure , reduce govt
borrowing from market
and consequent debt servicing
* Raise GDP to 10 % by 2018
Why is such
a BOLD step urgently
required ?
Current tax regime ,
* Punishes honest people
* Penalizes wealth creation
* Encourages creation of " Black
Money "
* Provides incentive for tax evasion
* Diverts resources into unproductive
assets such as cash/gold/land etc
* Stops people from working harder /
smarter
With this regime , people tend to ask :
* Why should I work hard and earn more ,
if the more I earn the more I
pay ?
* Why not evade paying taxes by hiding
real income ?
* How will I ever be able to buy that 1
room flat costing Rs 50 lakhs ? I
need Rs 20 lakhs by way of
black money to buy it ! Where do I get
that ?
* For every rupee that the government
collects from me as tax , only 15
paise come back to me in the
form of civic amenities .
Dear Policy Makers :
This is the SIMPLEST – EASIEST – CHEAPEST way to revive our ECONOMY , in a permanent
manner , without ever needing any other stimulus
There is no stimulus greater than the Human Greed !
30 Sept 2017
www.hemenparekh.in / blogs
Warm Regards,
Hemen Parekh
+91 98675 50808
From: Hemen Parekh
[mailto:hcp@recruitguru.com]
Sent: 30 September 2017 09:39
To: Cabinet Ministers
Cc: ssbhalla@gmail.com; ceo-niti@nic.in; BJP National Executive; bibek.debroy@gov.in; ashima@igidr.ac.in; rathin@nipfp.org.in; rr1@nipfp.org.in; ratanp.watal@gov.in; Gurudatt Kundapurkar; Hemen Parekh
Subject: 2 YEARS TO CLARIFY : 30 YEARS TO IMPLEMENT ?
Sent: 30 September 2017 09:39
To: Cabinet Ministers
Cc: ssbhalla@gmail.com; ceo-niti@nic.in; BJP National Executive; bibek.debroy@gov.in; ashima@igidr.ac.in; rathin@nipfp.org.in; rr1@nipfp.org.in; ratanp.watal@gov.in; Gurudatt Kundapurkar; Hemen Parekh
Subject: 2 YEARS TO CLARIFY : 30 YEARS TO IMPLEMENT ?
Will this work ?
Your Guess ?
============
Business Standard ( 30 Sept ) carries following news
report :
“ I-T cracks down on black money stashed abroad “
Indian
assets of tax evaders can be attached & confiscated against undisclosed foreign income or assets
The Income Tax (I-T) department has decided on an aggressive
plan under the black money law to nab tax evaders who have undisclosed income or
stashed assets abroad.
In an internal communication,
the Central Board of Direct Taxes (CBDT) told I-T officials that the spotlight should be on criminal
consequences of the Black Money (Undisclosed Foreign Income and Assets) and
Imposition of Tax Act, 2015.
In the guidelines, it clarified that the Act allowed
attaching and confiscating black money holders’ Indian assets against their
undisclosed foreign income or assets under the black money law.
It also said these evaders could face
separate prosecution under the Prevention of Money Laundering Act (PMLA).
The move follows poor results in
detecting undisclosed foreign assets and delay in concluding pending matters
under the Black Money Act, which came into effect in 2015.
According to the official data, only 52 cases have been
identified so far.
Of these, nine are from Mumbai alone.
I-T officials said there was a lack of clarity in the existing
framework, which this week’s
guidelines have explained. The internal communication specified that the tax
department can attach and confiscate the “proceeds of crime” equivalent in
value held within the country to recover dues.
What is your guess :
Will this unearth those “ hidden / undisclosed foreign assets “ ?
MY GUESS : YES ! BUT IN
ABOUT 30 YEARS !
On the other hand , Government could get
those holders of Undisclosed Foreign Assets to come forward and declare $ 1000 BILLION , within 3 MONTHS
, if it would just “ COPY “ the Indonesian Method !
Unbelievable ?
Believe it ! Read :
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30 Sept 2017
www.hemenparekh.in
/ blogs
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