Swap Income-tax, GST for a Banking Transactions Tax To Trigger Growth with Justice
These are unprecedented times as an extremely severe health and economic crisis is impacting our lives to a major extent, courtesy the novel coronavirus (COVID-19). Many distinctive features make COVID-19 a very eclectic crisis. First, it is a highly chaotic and unusual fusion of a deadly disease with an economic calamity. Second, its escalating growth has seen it become a global phenomenon in a very, very short period. Third, as economists would call it, it is an unparalleled supply and demand side (macro-economic) shock with great uncertainty in magnitude and duration. Fourth, its impact is many-sided and includes infection, death and loss of loved ones, severe human suffering in several forms (such as job losses, lack of food and nutrition, loss of education, even if it may be temporary, lack of cash flow for sustenance and livelihoods), greater indebtedness, severe global recession caused by a prolonged (uncertain) contraction in economic activities, brutal individual and corporate (financial) distress, huge stress on the financial systems (thereby exacerbating the supply of credit to the real economy), stoppage of flow of capital due to risk aversion by investors and other stakeholders and so on. Clearly, COVID-19, is a once-in-a-lifetime situation, whose multi-faceted impact will render the world into pre- and post-COVID-19 era’s. 
 
But there is a silver lining to it: countries that are best prepared to assimilate digitisation are likely to recover quickly (in an economic sense) and India appears to be one of them. In a brilliant recent article titled, “Life in the era of COVID-19”, prime minister Narendra Modi has talked of how the COVID-19 situation can be used as an opportunity to change things for the benefit of the poor and humankind and one theme that he repeatedly emphasises here is the need for and use of increased digitisation. As he so very succinctly argues, one thing becomes clear—COVID-19 has given us a rare opportunity to revolutionise our way of life, especially using digitisation and for the larger benefit of all humankind.   
 
One direct result of this could be an even greater use of the Reserve Bank of India (RBI) payments system than in the previous years and this precisely provides us with a wonderful opportunity to bring the kind of reform suggested by the PM. Indeed, the present situation provides us with a unique opportunity to reverse what has been happening for the last 72 years and bring in major progressive reforms in taxation. 
 
Direct and indirect tax proposals have that kind of power over an economy, the power to make or break it. And this is the time to rationalise income and other direct and indirect taxes to usher in a total revolution, whereby it will be easier for the government to maximise revenue while simultaneously reducing the burden on citizens. I think that is a pareto optimal goal. 
 
Let me quote from the great Indian epic Mahabharata, which offers advice on taxation to the ruler of the day: 
 
“The king should take wealth from his subjects at the proper time... Like an intelligent man milking his cow every day, the king should milk his kingdom every day. As the bee collects honey from flowers gradually, without causing harm to the tree; the king should draw wealth gradually from his kingdom for storing it.” — Bhishma’s counsel to Yudhishthira. (Mahabharata, Book 12: Santi Parva: Rajadharmanusasana Parva)
 
So, let us move on to the question of how to rationalize the direct and indirect tax regime and enhance revenue generation for the government while at the same time making it less burdensome for the citizens? We also need to simultaneously ask how India’s tax system be rationalized to eliminate black money generation?  
 
An answer lies in moving away from the existing complex income-tax system to one that is simple, cost effective and transparent, with lower transaction costs and greater ease of operation for the government and the taxpayer. 
 
In the long term, taxation laws need to be simplified. Wherever and whenever possible, positive reinforcement rather than the threat of punitive action must be used to influence attitudes and bring about long lasting behavioural changes. 
 
A transparent and simple tax system can go a long way in helping people negotiate their way through it.
 
Taxation should be pareto optimal—it should neither diminish the drive for enterprise nor should it result in huge inequities due to the hoarding of money by a select few. An unduly high tax rate and low exemption limits are constraining factors on consumption and enterprise. That is why having a transparent and forward looking tax system is critical for any economy.
 
What are the criteria that enable a system to be a forward looking transparent tax system?
 
Simplicity. 
Transaction Cost. 
Ease Of Implementation. 
Openness.
Equitability. 
 
In fact, the Nagpur-based economic think-tank Arthakranti, which has reportedly claimed credit for proposing the idea of demonetisation, has proposed a complete abolition of all direct and indirect taxes levied by the Union government, the various state governments and all local bodies across the country, with the exception of customs and import duties that function as international trade balancers. Instead, they propose a banking transactions tax (BTT) at the rate of 2% on all banking transactions, with the exception of cash withdrawals. 
 
Dr Subramaniam Swamy, a very well-known economist and politician globally, has repeatedly called for the abolition of the income-tax. I have also argued for the same in my recently released book, “Powering India to Double Digit Growth: Five Key Steps to A Robust Economy”, describing in detail the key (additional) steps to be taken to ensure a seamless transition to a more efficient, BTT based taxation regime. 
 
Given that BTT would be a flat, single-point tax to be levied by commercial banks on all bank transactions, it would be simple to implement and have practically zero compliance cost. With the numbers of those within the fold of the banking system expected to increase even more significantly (given the drive for 100% sustained financial inclusion), BTT is likely to generate the required tax revenue and have buoyancy too. 
 
The negative fallout might be an attempt at bypassing the banking system, but certain additional measures (discussed in in detail in my above cited book) need to be undertaken to ensure that people prefer not to transact in cash, wherever and whenever possible. However, there exists the challenge of ensuring that the people newly entering the banking system remain within its fold. Simplifying banking procedures and improving the quality of and access to other support services should help achieve that. 
 
Coming back to the BTT, let us look at transaction numbers to understand how beneficial the BTT could be if and when it is implemented. For example, for the FY18-19 alone, the total value of RBI payment system transactions (Table IX.1: Payment System Indicators – Annual Turnover) stood at Rs28,86,465 billion, or Rs28,86,46,500 crore. If we compute a BTT of Re1 per Rs100 (or 1%) across this 28,86,46,500 crore that flowed through the RBI payment system in FY18-19, we get a BTT collection of Rs28,86,465 crore. 
 
Thus, if one were to try to make a projection based on the total BTT estimated to have been collected using the RBI payment system data for FY18-19, the annual total yield from BTT would have been able to easily compensate for the loss of revenue from all direct and indirect taxes which stood at Rs20,80,000 crore as per the data available and cited in “Union Budget 2019-20: An Assessment, RBI Bulletin September 2019” as under column 4, Table 2
 
In fact, there would have even been surplus revenue of Rs806,465 crore, which is huge by any standards. And more importantly, it would have been far easier and less costly to implement and ensure compliance. 
 
The same principle should hold good for 2019-2020 and I have taken a look at the provisional RBI payment system numbers for 2019-2020 (which is available until February, 2020) and it suggests that a BTT of Re1 per Rs100 transacted through the RBI payment system, should be more than good enough to take care of the total of direct and indirect taxes—budget estimates put it at Rs24,61,000 crore (see column 5, Table 2). 
 
Using the provisional RBI payment system data until February 2020 and also extrapolating it for March 2020, the total estimated revenue from a BTT of 1% would have yielded Rs25,00,901 crore, which as you see is higher than the Budget estimates of direct and indirect taxes of Rs24,61,000 crore (see column 5, Table 2). And going forward, post COVID-19, with increased digitization and further stabilization of the economy, the transactions through the RBI payment system should only further increase. 
 
Accordingly, the following changes to the present tax system are suggested. 
 
A crucial first step here is to abolish all direct and indirect taxes—i.e. personal income tax and corporate tax including all kinds of capital gains tax (both short and long term). Corporate tax will also have to be abolished for all body corporates. 
 
GST must also be completely eliminated.  The same has to be immediately and seamlessly simultaneously substituted with a banking transaction tax (BTT of 1%) of Re1 per Rs100 transacted through RBI’s payment system. 
 
As the velocity of the payment system and banking transactions increase, the BTT would also be good enough to provide a huge surplus as well. I believe, that, post COVID-19, after the economy stabilises, BTT should ultimately settle down at 75 paise per Rs100 (or 0.75%). 
 
After a few years, with inclusive and further digitization, it could even come down to 50 paise per Rs100 (0.50%) The BTT is what I see as a fair system to taxation, without burdening the common person—it will bring into its fold, almost everyone in the country from a tax perspective (currently, less than 10% of India is part of the direct tax system) and give huge tax revenues to the government and most importantly, without inconvenience to the common man. A forthcoming article dwells on the specific steps and actions that would need to be undertaken to operationalise this idea in real time. 
 
The country has been through testing times. Even in the face of adversity, the people have stoically borne inconveniences/losses in the hope of a liberalised economy in the future that will yield benefit to all. Taken together, the abolition of direct and indirect taxes and their substitution with a BTT, as outlined above, should start to yield significant results. 
 
Once the above is done, it is expected that the various pillars of economic growth will automatically start to move and move at an increased pace. Over time, the shift to a BTT should greatly enhance domestic consumption, increase domestic savings, further reduce interest rates for lending and make exports competitive, apart from helping to generate surplus funds for development (including infrastructure), enhance investment, eliminate poverty and transform India into a rapidly growing, stable and inclusive economy. 
 
Together, the abolition of direct taxes and indirect taxes and introduction of a simple BTT should also help in building a more competitive industrial base in India, especially among the micro, small and medium enterprises (MSMEs) and also in manufacturing in general. Various manufacturing clusters that are doing badly should now be able to do better and without a doubt, exports will pick up. 
 
The move to BTT (with additional reforms in the real estate and other sectors) should also enhance the overall size of the economy, especially given that the informal sector and the parallel (black) economy in the real estate sector would have been fully absorbed into the mainstream. 
 
One last point is in order. Much has been tried for the past 72 years (with varying degrees of success) with regard to building a vibrant economy and I strongly believe that it is a now or never situation for the Indian economy today. 
 
What we do now will determine the quality of life for our children and grand-children (much into the future) and India is clearly at the cross-roads. 
 
Here is a great opportunity to create a vibrant and dynamic economy and that should be utilised. That is what India needs today and that is what will cure our ailing age old system of economic governance and push us into an era of dynamic and vibrant entrepreneurship based on sound fundamentals into a period of long-lasting (hopefully, double digit) growth. 
 
(Ramesh S Arunachalam is author of 12 critically acclaimed books. His latest release in January 2020 is titled, “Powering India to Double Digit Growth: Five Key Steps To A Robust Economy”. Apart from being an author, Ramesh provides strategic advice on a wide variety of financial sector/economic development issues. He has worked on over 311 assignments with multi-laterals, governments, private sector, banks, NBFCs, regulators, supervisors, MFIs and other stakeholders in 31 countries globally in five continents and 640 districts of India during the last 31 years.)
 
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    vivek

    3 weeks ago

    Very very sound logic...my vote for it ! But is government lending it's ear to it? These are the times of "now or never" economy can bounce back immediately if the aforesaid recommendations are implemented. No tax implies no need to hide income. Hence no black money..system benefits...earner benefit... incentivising people to consume more through reducing BTT with increasing consumption will attack the ghost of consumption crisis head on!

    gcmbinty.37

    3 weeks ago

    Wonderful BTT (Banking Transaction Tax) article by Ramesh S Arunachalam
    28 April 2020, the original author of the idea Arthkranti being Dr. Subramanian Swamy. I have been widely propagating the adoption of Arthkranti system of taxation of every transaction of business, say, 2% only, on every business transaction through banking channels - No Sales Tax / GST and no Income Tax, no big paper work, not much of man power - and give boost to digital transaction.

    While PM Modi has been talking on various forums about digital transaction, but he has as yet not talked to the FM to move towards BTT and swapping of Sales Tax/GST and Income Tax, which he must do now without loss of any further time. The system is very much Indian and should be adopted.

    ymalkar

    4 weeks ago

    Dear bsgandhi.
    It is a myth that Indian business men are dishonest and evade tax. But the truth is that they are forced to do this, because of complicated tax calculation system and high tax rates. With the applicability of proposed BTT system, direct and indirect taxes will be judiciously reduced or abolished which will motivate assesses to record all transactions legally.

    bsgandhi77

    4 weeks ago

    It lookes simple and effective proposition theoreticaly but in practice it will not be. E.g. if I go to a offline cellphone vendor , he insists on cash pmt.,small grocery or mom and pop stores they all deals in cash, most of small retailers don't accept card or wallet pmt. To keep out of GST liability. So a big part of economy will avoid BTT.

    REPLY

    rameshsa2009

    In Reply to bsgandhi77 4 weeks ago

    Thanks for your comments. There are safeguards proposed to reduce large volume cash transactions and it calls for a number of measures and reforms including in real estate. I will be sharing the same as a complete article at a later date and it will address some of the issues you have raised. Some small cash transactions will however be there. Also, the current volume of RBI payment system transactions and its yearly growth are more than sufficient for the proposed BTT to cover the sum of direct and indirect taxes (if fact there will be a surplus over this) and hence, make BTT a viable proposition. Thanks. Will post the new article link here for your perusal. Thanks.

    rakeshpushkar

    In Reply to rameshsa2009 3 weeks ago

    Outlandish idea. Some segments will collapse. If you impose tax of 1% on cblo or Fx transactions these markets will become untenable. Or for that matter RTGS.

    rameshsa2009

    In Reply to rakeshpushkar 3 weeks ago

    Thank you. Let us agree to disagree. There are huge benefits from BTT. ALL OTHER TAXES TOTALLY ELIMINATED and India's growth story will be unparalleled and in double digits. The idea is very viable. It's time has come. You are entitled to your view and I have solid research/reasons/benefits that favour BTT. PLUS there will be several categories and exceptions for BTT. thank you

    ymalkar

    In Reply to rakeshpushkar 3 weeks ago

    Dear Rakeshpushkar...
    BTT will definitely create a win-win situation for the all the sectors of the economy including government. Thus the proposed banking transaction tax system will prove as an ideal tax system.

    ymalkar

    4 weeks ago

    Thanks,
    Arunachalam Sir for very good article on arthakranti's BTT - The perfect tax system is that which can curb flow of black money, reduce corruption, creates equality, minimize tax collection cost, increase tax base and facilitates tax payer to easily compute the tax. The effective and transparent tax system can help any economy to develop in a systematic manner with equality. The proposed banking transaction tax will be applicable as a single point tax on banking accounts which are credited or receives money. It is proposed that a certain percentage of tax will be deducted on each banking transaction and all other taxes except customs will be abolished.
    ( For details visit www.arthakranti.org )

    kasreenivasan

    4 weeks ago

    In BTT rich and poor will be contributing revenue equally. Rich should contribute more. So in my opinion BTT is not acceptable

    REPLY

    rameshsa2009

    In Reply to kasreenivasan 4 weeks ago

    Fair Point sir. That is why the rates of BTT will be different for different categories. The average rate of 1% is given for illustrating the calculations and in reality, during implementation rates can be created for different categories of people, corporations, MSMEs, own family transfers (to mother etc), b2b, b2c etc. Thank You. Point is well taken. Many commenters have also suggested differential rates for different categories of people, volume of transactions, b2b, b2c, family members etc. These are finer details that can be operationalized for effective implementation (i.e., once policy makers take a decision in favour of the proposed idea of swapping BTT for all direct and indirect taxes).

    in4tunio

    4 weeks ago

    After this article and a previous one on something like "why NRC if great", it seems Moneylife has become a tool in the hands of trolls.

    in4tunio

    4 weeks ago

    1. Wherever possible, big cash transactions will happen outside India, particularly between big corporates. Complex rules will follow regarding such transactions.

    2. Black money transactions will explode.

    3. GST complications will not go away since the companies pay their suppliers at different time than their customers pay them. There are various other complications. Author does not seem to have much knowledge about functioning of business.

    4. If BTT is so great, which other countries are doing it? Why is there no modern history of BTT in the article? Or, like demo do you want to experiment with the lives of 1/6th of humanity, 130 billion people?

    REPLY

    rameshsa2009

    In Reply to in4tunio 4 weeks ago

    Along with introduction of BTT, there will have to be appropriate safeguards to prevent cash transactions in real estate and a whole set of reforms are required there and will be done.

    Real legitimate businesses have realized the futility of engaging in large cash transactions and things are slowly changing as 360 degree information is available and technology will help to a large extent in triangulation. And COVID-19 has accelerated the demise of large cash transactions the world over. That is reality.

    BTT will not have the hangover of GST. It is built in and passed on and it is a simple, single point tax.

    Mark my words. BTT will make India a true leader in economic reform and of course all implementation issues that crop up must be addressed. Implementation will bring on-course corrections but as the commenters have mentioned below, there are huge advantages to the BTT.

    Well. My article is a just point of view. You can agree or disagree but certainly you cannot call me a troll as you have in your above comment. I strongly object to the use of such words. Let the discourse be decent and let us debate it out. If you have substantive issues, please raise it and I will take the feedback seriously and build it in and try and address these. Otherwise, let us agree to disagree. Common, we can have different points of view and not call each other by names.

    Criticism should not be politically colored and has to be constructive. I have no political leanings at all and I am not a member of any political party. I am professional who has worked in 640 districts of India and 31 countries with governments, multi-laterals, private sector, the UN, regulators and supervisors in the last 31 years. I strongly object to your language as it is defamatory.

    subra1905

    4 weeks ago

    Apt time it’s.
    The author Mr Ramesh has rightly vouched for the opportune time to bring in Banking Transaction tax, BTT shortly.
    As a practitioner of taxation for about two decades, I strongly feel BTT is a sure-fire way and it can herald in a quality productive time. In the sense that it will go a long way in obviating unnecessary tax litigation at various for a.
    Years ago on one occasion an ex parliamentarian was a co-passenger in a train journey. In the brief conversation, he had mentioned that former Minister Madu Dantavate was in favour of replacing tax laws with transaction based tax, i.e., like BTT.
    If the BTT collection can overwhelm, as the author writes about, the total of estimated traditional direct and indirect taxes, and with value addition of cost saving, is not time to roll out a red carpet to BTT and bring curtains to existing direct and indirect taxes. When every single payment transaction goes through the hammer of BTT, there is hardly any need for separate compliance cost, like filing of separate return for Tax Deducted at Source, Special Financial Transactions, reporting of high value transactions etc.
    Already the whole nation is sensitized to do digital transactions. Like social distancing to flatten out Covid19, Government may go stricter about no-cash transaction, establish stringent checks in place to curb and penalise violation. This measure will surely work out in ensuring people to adopt digital transactions. The argument that people may not be well equipped to handle digital transaction is a fallacy. Already we hear the number of mobile phones is almost equal to the size of the population. If proper awareness is given, people will have no hesitation to switchover to digital transaction. A techie friend who goes onsite work to other parts of the globe said, in digital transaction, India, in his view, is far better and advanced than any other countries.
    May be various rates of BTT could be adopted factoring in considerations like small, medium enterprises, bigger ones, turnover-depended ones etc .
    If BTT is brought in, there is nothing like that.
    Ramanthan Subramanian

    mahesh.kalkar

    4 weeks ago

    Great amount of research has gone into re-presenting this concept. Kudos to the author. An unprecedented national emergency is as best a time as any to introduce any drastic step that is reform oriented.

    But let's be practical here. Ms Sucheta Dalal comes up with brilliant ideas through her videos and articles. Do they get implemented? No chance. There are very many people who come up with great ideas. Prof ND Nalapat is, one for sure.

    Sanjeev Sanyal & Krishnamurthy are economic advisors. Both are brilliant. Are their ideas seeing the light of the day in governance? Very few, that too in twisted form thus denying the intended benefits of a policy initiative.

    Let's say an idea reaches Modi, he likes it - asks his team to implement - Result - utter chaos - why does it happen? Our famed bureaucracy which thinks it knows the best. So when a novel idea is to be implemented, bureaucrats will top it with their TADKA and citizens will get only burnt portion of any cooked dish.

    If an organ of a Govt doesn't have accountability, that is asking for disaster. We have Bureaucracy & Judiciary. Political parties can be thrown out in elections.

    Constitution gives absolute Job protection to Bureaucrats - that has to be amended, giving power to elected Govt to throw out the dead wood, if Country has to progress.. This has been done in Australia, UK & USA. Equally important is reforming the Judiciary - 6 years of NDA govt, there is hardly any movement in this direction.

    Mr Arunachalam may like to watch these 2 videos - Bureaucracy is Modi's Enemy No 1 - Part I & II.

    https://www.youtube.com/watch?v=X-ttPABbla4&t=35s

    https://www.youtube.com/watch?v=siCM--dvnos&t=5s

    REPLY

    in4tunio

    In Reply to mahesh.kalkar 4 weeks ago

    The least accountable today is one particular political party which claims it will not be thrown away for 50 years.

    mahesh.kalkar

    In Reply to in4tunio 4 weeks ago

    :)

    raviforjustice

    4 weeks ago

    BTT is something that has been bandied about at least during the last 5 years. One doesn't know what is holding it back. In fact if it had been implemented we cold have avoided the hiccups experienced during GST. Hiccups would have been there while implementing the BTT too. And it would have been fine tuned by now.

    I would have supported GST even if it had been limited to the main check post at Walayar on the Kerala-Tamil Nadu border. The misery of the truck drivers had to be seen to be believed and the corruption there was of course legendary.

    BTT should revolutionize our lives, freeing us from the fear of compliance with laws that even experts may not agree with each other. (Not any different from our courts, by God!)

    One thought that occurs to me is the need for variable BTT based on the amount per transaction and the number within a specified period of time.

    REPLY

    suketu

    In Reply to raviforjustice 4 weeks ago

    We get no reply why its not implemented as current PM doesnot believe in taking q from media since last 5 yrs.He believes what he says is final.No questions,no explanations,.

    nagendra.kamath

    In Reply to suketu 4 weeks ago

    day media becomes accountable for the news , fake news and personal agenda as news they publish ... any PM will start taking q from Media

    in4tunio

    In Reply to nagendra.kamath 4 weeks ago

    PM will never start taking q from Media bec the problem of fake news exists in every country where their PMs take questions. Furthermore, most fake news is peddled by PM's party's IT cell.

    avinashsakhrani

    4 weeks ago

    What a fabulous time to impliment BTT ! In my opinion GST and Income tax should continue for companies with FDI. Govt. should slowly start opening up FDI in all sectors and continue taxing them with GST and corporate income tax.

    All Indian owned businesses and individuals should come under BTT. The best thing about this proposal is that we will be free from compliance burdens. Banks will do it for us / on our behalf.

    My fellow business owners..Just imagine ...no GST, no remembering hsn codes and their respective rates of gst, no filing of GSTR1, 3B, TCS, 9, 9C, no remembering dates of payment of advance tax, no individual IT filing, no 44ab audit, no TDS payment, no TDS filing, the best part- no scrutinies, no assessment, no penalties, no interest, etc.. Right now, I feel like I'm entangled in a web of compliances... just the thought of BTT calms my nerves and has me looking forward to it.

    Just focusing on business growth.. should be the mantra now. Doesn't the govt. Want India to grow at 25% (5 Trillion economy?) in the near future? What a life changing move it would be for Indians.
    As for the disparity in business margins vs the rate of BTT, that can be sorted out by classifying the transaction b2b or b2c. B2b can attract a lower rate of BTT. But, in my opinion, manufacturers and retailers must pay full BTT, the middlemen may by conditionally taxed lower.

    Lower rate of BTT for transactions between individual savings accounts for non-commercial transactions..and that also should be capped to avoid misuse.
    Regular BTT rates should be charged for inter account types and between current accounts.

    But, I read about F.O.R.C.E .. I had a sleepless night. Just imagine the audacity that these IRS officers have to publish such an unsolicited report that would bring India at the brink of going bust during these grave times. The Modi government ought to get an idea of what such officers ( direct and indirect tax officers ) are capable of doing if allowed to continue and what they've been doing to assessees all along. They are the real terrorists especially any state indirect tax officers who are constantly abusing their powers and misusing their authority to make personal gains. All small businesses are hurt by them and we bear the brunt of their corruption. These state appointed officers cause more psychological damage and trauma and torture to business owners along with monetary losses.
    As for these officers.. They will all have to be posted to banks and other infrastructure projects to secure their jobs.

    As for the Chartered accountants .. many/ most of them have made a hell of a lot of money in the web that small and medium businesses have been entangled in and by having morally questionable means. The implimentation of BTT will turn many CAs into entrepreneurs and some of them can continue their practice at banks.


    My sincere appeal to PM Modi ji, FM Nirmala ji and all decision makers.. Please unentangle us from all compliances. Allow us to use all our time to grow our businesses.

    Please understand that the mind of a typical trader / retailer who believes that every rupee saved is a rupee earned will have every intention to evade and avoid any kind of tax and cannot understand and track complex compliances for nuts. I hope the Govt. realises this and simplifies the tax structure with BTT. Incentivise us to innovate, export, reward is to manufacture locally, etc..

    In a single move, impliment BTT and introduce very attractive amnesty schemes for all pending direct and indirect tax cases, notices, orders, appeals, etc.. please don't miss out anything.. just wipe out all tax disputes in this country Excise, Customs, Cenvat, VAT, Sales tax. Etc.. This will be windfall revenue generator for both centre and States.
    Also, wipe out black money by letting everyone deposit all money into Bank accounts, no questions asked Scot free. Ofcourse this cannot be done by demonitising the 2k notes.

    If necessary, which is most likely..
    Please appoint Mr. Swamy and Arthashastra as consultants to implement BTT with a war footing strategy and liberate us from compliances, corruption, tax terrorism, bureaucracy, etc..

    The above is an honest well thought out opinion/ appeal of a small business owner, unbiased and uninfluenced by any person or political party.

    JAI HIND!
    BHARAT MATA KI, JAI !!!!!

    rameshsa2009

    4 weeks ago

    Friends, thank you for all your comments. I am deeply grateful.

    I want to say a few things

    Please kindly take time to read this

    I have worked on this BTT proposal for 4 years and spoke to a large number of people and taken advice to develop this.

    Let us facts the facts

    For whatever be the reasons, the present tax system is a very complex one and needs overhaul

    India is a country that needs double digit growth. Only that can satisfy the aspirations of millions of young people especially

    We have tried many things for 72 years but there is still a lot of poverty and vulnerability around. I have worked in 640 districts in India and 31 countries at the grassroots over the last 31 years and seen so much hopes and aspirations not being fulfilled

    Our economic governance needs a make over.

    I believe that the BTT as conceived should deliver results as all other taxes will be eliminated. With this BTT regime, I strongly believe that INDIA will be able to have double digit growth soon. Of course, any proposal is bound to have issues and it will be sorted during implementation.

    I will share more details on the proposal and would love your feedback and comments. Let us all make this a BTT that works for all of us and then take it to the powers that be.

    Looking forward to your support as India is at crossroads now. It is now or never in terms of thinking out of the box and choosing a path of eclectic economic governance.

    Covid 19 is a serious heath and economic crisis and solid tax reform can help tide over the economic one. Let us all work together and get the best proposal going on BTT.

    THANK YOU.

    Ramesh Popat

    4 weeks ago

    this proposal is with govt. since long. due to demo and gst outcome,
    it is thinking thrice before a giant leap. or may be in 'doting the i and
    cutting the t' stage. yes but the idea and the need is pressing. may be
    a prior 'hint' and then done.

    REPLY

    in4tunio

    In Reply to Ramesh Popat 4 weeks ago

    If implemented, India will lose minimum 2% further GDP growth every year, just like demonetisation. Max India can expect at normal times (without manipulation) is 4% since we are already below 6%.

    lakshminarasimhan61

    4 weeks ago

    It's a great insight and especially on BTT it's typically a new initiative if our Govt considers with above facts. And I see it's a very transperant & easy to make good audit on taxes irrespective of if it's direct nor an Indirect.. And I never doubt it will create a hiegien India for future generations too. Thanks for sharing us & hope it will trigger GOI to redefine the new concept and simplify TAX in all aspects.

    CBDT charge sheets 3 IRS officers involved in controversial tax report 'Force'
    The Central Board of Direct Taxes (CBDT) has issued charge sheets to three senior Indian Revenue Service (IRS) officers and has divested them of their current responsibilities for their role and complicity in the preparation of the 'tax hike' report 'FORCE' which advocated imposition of wealth tax, inheritance tax, and a Covid-19 Surcharge on taxpayers.
     
    The Finance Ministry on Sunday had slammed the report released under the aegis of the Indian Revenue Service Association (IRSA), terming it ill-conceived and ordered an inquiry. It felt that the report created panic and tax policy uncertainty in the already stressed economic conditions in the country.
     
    The three officers against whom action has been proposed include Prashant Bhushan, General Secretary of IRSA; Prakash Dubey, Director DOPT and Joint Secretary, IRSA; and Sanjay Bahadur, a 1989 batch IRS officer. They have been asked to give written reply for their action and admit the fault or face inquiry and further action.
     
    Sources said that the preliminary inquiries have shown the role of the three officers against whom the charge sheets have been issued and thus they have been divested of their current charges.
     
    The CBDT has said on Sunday that it never asked IRS Association or these officers to prepare any report on taxation and no permission was sought by the officers before going public with their personal views & suggestions, which it felt was a violation of extant Conduct Rules.
     
    Government sources said that these senior officers, despite having more than 30 years of service, failed to exercise due care and went on to misguide the 50 young officers.
     
    "Government would have definitely given due consideration to suggestions made by the young officers. However, in this case, the reports, instead of being sent to the government through official channel, these senior officers of rank of Principal Commissioner misguided them and went public with report which created panic and tax policy uncertainty in the already stressed economic conditions in the country," an official source said.
     
    Among other suggestions the Indian Revenue Service Association in its report titled Fiscal Options & Response To COVID-19 Epidemic (FORCE) had suggested the imposition of wealth tax on the super rich, with net wealth at least Rs 5 crore and a one-time COVID relief cess of 4 per cent.
     
    It said that the "so-called super rich have a higher obligation towards ensuring the larger public good".
     
    The tax officers' body said they can be taxed through two alternative means, for a limited, fixed period -- 3-6 months. It suggested raising the highest slab rate to 40 per cent for total income levels above a minimum threshold of Rs 1 crore or re-introduction of the wealth tax for those with net wealth of Rs 5 crores or more.
     
    Suggesting the imposition of a one-time COVID relief cess, the IRSA said as opposed to surcharges, cess are more broad-based since they relevied on every taxpayer and are likely to mobilise more revenue as well.
     
    The current rate of cess is 4 per cent, including 2 per cent health cess and 2 per cent education cess.
     
    "Thus, an additional one-time cess of 4 per cent on account of COVID Relief (could be called COVID Relief Cess) could help finance capital investment in COVID Relief work," the report said.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    raviforjustice

    4 weeks ago

    I am wary of this misuse of 'extant Conduct Rules'. In a democracy even public servants should not be denied their right to freedom of speech. After all, the public servants are public servants and not the servants or employees of the government of the day. In fact a Whistle Blowers (Protection of) Act has been proposed only to protect those public servants who expose corruption in their official environment.

    In the current case it would have been good if the report had been released by the authors with a foot note that the suggestions are of a personal nature and not official. Having failed to do that, it should have been sufficient if the government had issued a clarification to that effect. There is no doubt that the report was well meant or what they call in official jargon, in good faith.

    By the way, in Kerala the senior most member of the IPS had been kept suspended for more than a year and half. His faults? One, he mentioned in a public forum that the relief work carried out by the government after the Ockhi typhoon had not been satisfactory and two, he had published a book-Swimming with the Sharks- without taking permission from the government.

    He has been taken back on the orders of the CAT. But given a job that used to be done by a public servant not higher than a tehsildar or RDO. He is the MD of a Metal Industries that makes spades, pick axes and such implements with a staff of about 45 persons and is in loss, since God alone knows how long.

    Interestingly, his status is retained as that of the Director, Vigilance and Anti Corruption Bureau, the post from which he had been removed after he pursued some corruption charges against some members of the IAS. One of them had been the then Chief Secretary, who is now re employed as the Director of another dubious government organisation, the second one is the current Chief Secretary and the third was also a Principal Secretary/Secretary to the GoK.

    The arbitrariness does not end there.

    Even during Covid times there is a scam raging in Kerala, wherein the government is alleged to have handed over the data of all those affected by Covid, including the ones kept in quarantine on arrival from outside the state, to a malayalee owned, US based company, Sprinklr.

    When journalists suddenly questioned the CM during his usual 6 PM briefing on TV he had defended the transaction. Then for the next few days he cancelled even his briefings and avoided the press. Meanwhile the IT Secretary came out openly claiming that he alone was responsible for the transaction and defending it, including all the illegalities like not taking the concurrence for the law dept or not including a clause to ensure the security of data.

    This obviously is due to the confidence that the CM would not give permission for prosecuting him, as in the case of the three members of the IAS mentioned earlier.

    REPLY

    deoa1948

    In Reply to raviforjustice 4 weeks ago

    This type of suggestions ( to raise taxes on a category of citizens ) can be given by anybody, and does not require any expertise in taxation
    Why can't they come out in the open and show the leakages in the system ? Do they feel it is not in their self interest ?

    Ganesh

    4 weeks ago

    Thanks for changing display pic related to news item .

    Ganesh

    4 weeks ago

    I don’t know whether its mistake of automatic steps in your reporting system or your news layout person / writer do not know that Prashant Bhushan refered in news item and the one shown in accompanying image of news items are totally 2 different persons

    REPLY

    raviforjustice

    In Reply to Ganesh 4 weeks ago

    Thank God, this Prashant Bhushan who was shown in the image is not a judge or ML would have been in immense trouble by now, even of they had apologized for an inadvertent error.

    E-mails Sent for Facilitating Faster Tax Refund Can Not Be Misconstrued as Harassment: CBDT
    Responding to some observations being circulated on social media alleging that the Income Tax (I-T) department is pursuing recovery proceedings and using arm-twisting methods by adjusting outstanding demands of the start-ups, the Central Board of Direct Taxes (CBDT) has clarified that these observations are completely unfounded and are total misrepresentation of facts.
     
    In a statement, the CBDT says, "(The) email seeking clarification from all those who are entitled to get tax refund but also have outstanding tax to pay cannot be misconstrued as harassment. These computer-generated emails have been sent to almost 1.72 lakh assessees, which includes all classes of taxpayers – from individual to Hindu undivided family (HUF) to firms, big or small companies including start-ups and therefore to say that start-ups are being singled out and harassed is total misrepresentation of facts."
     
    "These emails are part of the faceless communication, which protects public money by ensuring that refunds are not released without adjusting against outstanding demand, if any. These emails are auto-generated under section 245 of the I-T Act in refund cases where there is any outstanding demand payable by the assessee. In case the outstanding demand has already been paid by the taxpayer or it has been stayed by the higher tax authorities, the taxpayers are requested through these mails to provide the status update so that while issuing the refund, these amounts are not held back and their refunds are released forthwith," it added.
     
    The CBDT says "Such communications are just a request for seeking an update response from the assessee for the proposed adjustment of refund with the outstanding demand and cannot be misconstrued as a notice of recovery or be perceived as so-called arm-twisting by the I-T department because the department is duty bound to protect public money by adjusting the outstanding demand before releasing the refund."
     
    According to the Board, to provide hassle-free tax environment to the start-ups, a consolidated circular (no. 22/2019 dated 30 August 2019) was issued by the CBDT. Apart from laying down the modalities for assessment of start-ups, this circular also stipulated that the outstanding income tax demands relating to additions made under Section 56(2)(viib) would not be pursued. Any other income tax demand of such start-ups would also not be pursued unless the demand was confirmed by I-T appellate tribunal (ITAT). Furthermore, a start-up cell was also constituted to redress grievances of start-ups and address other tax related issues of such concerns, it added.
     
    Explaining the extant procedure pertaining to recovery of outstanding demands in the case of an assessee, the CBDT says that an opportunity is provided by the department to the assessee to either clear the demand or intimate the status of said demand to the I-T Department. 
     
    Invariably, it says, such communication is made by the department by sending an email to the assessee informing it of the quantum of outstanding demand and providing an opportunity to pay the demand or respond with evidence regarding payment of the same if already made, or update the status of any other action on it.
     
    According to CBDT the assessee on its part is required to furnish details of the pending demand, whether it has been paid or has been stayed by any appellate or competent authority so that the department could keep the same in abeyance and do not deduct this amount from refund.
     
    "Thus, following the existing procedure of recuperation of outstanding demand, similar mails have also been sent to 1.72 lakh assessees including start-ups to intimate to the I-T department, the status of the demand outstanding and whether it has been stayed by the competent authority so that appropriate action can be taken for release of refunds without delay to the start-up. However, not providing such a response to the emails of I-T dept and raising false alarm is contrary to the spirit of the circular 22/2019 of CBDT and is totally unjustified," it added.
     
    The CBDT also requested start-ups to respond to its emails at the earliest so that further necessary action can be taken by the I-T department to release the refunds immediately wherever due, in accordance with the extant procedure.
     
    The Board says, till date it has issued nearly 14 lakh refunds worth over Rs9,000 crore to various taxpayers including individuals, HUFs, proprietors, firms, corporate, start-ups, MSMEs in order to help taxpayers in the COVID-19 pandemic situation. Many refunds are pending for the want of response from the taxpayers and will be issued at the earliest possible once the information is updated, it added. 
     
  • Like this story? Get our top stories by email.

    User 

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone