India 2020

Tax Reforms

Viswakalyan Foundation proposes to introduce transaction tax system in India and abolish paper currencies above Rs.50/-

1. What are the causes for un-structured development in India?

I believe the root cause for un-structured development in India is the current tax system prevailing in the country.

2. What are the consequences?

Poverty.
Imbalance.
Corruption.
Confusion.
Mismanagement.
Crime.
Theft.
Aggressiveness.

3. How it happens?

In the modern world the driving force behind major activity of the nation is money. 90% population of the country is directly or indirectly depends on some form of trade or business to make their living, whether it is agriculture, manufacturing, trading or service sector. The tax system in the country has created a fear and hatred in the minds of people and created a parallel economy of black money, which has de-stabilized the power of currency.

4. The dynamic power of currency!

When a lakh rupee is got rotated in the market / system at an average of 5 times a day and 150 times a month the currency will have a transaction value of 1.5 crore rupees per month. If the same money is kept idle in a locker (like generating black money and keeping it idle or transferring the money to foreign banks or moving it out of the country for utilization of other economies) it will lose its charm and the transaction value will be zero rupees harming the growth of the country. The efficiency of the currency is lost by using paper currency.

5. How it affects the Government and the nation as a whole?

Though new thoughts and innovative ideas have changed the trade and market scenario in major parts of the world, most of India remained same. Most of the industries remain un-organized and people avoid doing transactions with banking system. Instead, the industry uses cash as their medium to receive payments. The Government is at the mercy of its citizens for tax disclosures and payments. It gives the opportunity to people to manipulate their accounts and generate black money limiting the usage of modern age banking system. It eliminates the business automation process and affects employment generation opportunities.

6. What are the disadvantages of black money and paper currency?

Improper distribution and rotation of funds.
option for investors is limited, un-structured and creates cash crunch in the market.
Un-necessary inflation in gold, commodities and real estate sectors.
Narrow minded approach towards trade and business.
People encourage corruption to hide their mistakes.
Limited purchasing power even for basic requirements like food, clothing, shelter and majority of the population lives in poverty.

7. How we can remove the fear of tax officials in the country?

Abolish cash currency in the country above Rs.50/-
Remove all forms of tax systems like Vat, Income Tax, Excise duty, Service tax, Stamp duty, Corporation tax etc.etc.
Introduce transaction tax system of 2% on credit amount of all bank transactions.
Merge all tax departments in to one tax department.

8. How banking sector will improve the economy in the country?

All financial transactions of the country should be routed through the banking system. Transaction tax system will change the destiny of the country. There will be a ten fold growth in the banking sector itself. It will create huge opportunity for trade and employment. The whole banking system will be empowered by growth and funds. This will create chain reaction.

9.What is chain reaction?

Once transaction tax is introduced, the Government and banks can lend more money back in to agriculture, trade, industry, research, infrastructure and development projects. This will lead to

Automation in tax collections. Less scope for people to manipulate their books.
Government can receive the tax payments on daily basis.
Employment generation in all sectors of the country.
Corruption and bribe free transactions.
Quality infrastructure for health and education.
Well-planned roads, residential, commercial and industrial townships.
Global approach in trade and profession.
Eradication of poverty.

10.What will be the tax collection in total?

The total tax collection of the country by state and central Governments is 5 Lakh crores now. The total transaction turnover of all banks put together is 3 crores crores or even more. 2% of banking turnover is 6 lakh crores. So the Governments will get its total tax collection with the current turnover of the banking system itself. However, once transaction tax system is introduced the tax collection will multiply to ten times or even more than present tax collection. (The figures given here are approxmate, however please provide me exact figures if you have them)

11. How can we bring complete black money back in to the economy?

Amnesty to all people who have generated un-accounted money and leave the judgement to the supreme (God). People should support the Government to bring black money back in to the Indian mainstream economy which is more than 400 lakh crores. We should forgive the mistakes of past and move forward to create a bright future for our next generations.

The Government should fix a time limit to deposit all cash, transfer money from foreign countries to their respective accounts in India.
No questions should be asked about the source of the money.
Introduce transaction tax system on a pre announced date.
Abolish paper currency above Rs.50/- which will curtail further generation of black money and force people to use banking system.

12. What will be the overall scenario look like after transaction tax system is introduced?

Vibrant economy. We can monitor actual strengths and weaknesses of the economy.
Encourages maintaining accurate book keeping by individuals and companies.
I vision a liability and corruption free strong economy. It’s like people riding electric vehicles in their cities. A pollution free healthy atmosphere all over.

Popat Bhai.(popatbhai[at]in.com

)
Viswakalyan Foundation.
India.