Background
Narendra Modi, during his campaign speeches, had harped on the menace of black money and the havoc that it was causing the Indian Economy and soon after coming to power, he has set up a high powered committee to go into the entire aspect of the vexed problem. He also used to say that the personal income tax could be scrapped. His idea seems to have been generated by the proposal given below. Is it, then, the blueprint for Prime Minister Narendra Modi's economic policy?
The 'Arthakranti' Proposal
1. What is the Arthakranti Proposal and who has given the proposal?
2.The proposal has been given by a Pune (Maharashtra) based “Arthakranti Sansthan” which is an Economic Advisory body constituted by a group of Chartered Accountants and Engineers. This concept has been patented by the Sansthan. They reiterate that it is an effective and guaranteed solution to prevent Black Money Generation, Price rise and Inflation, Corruption, Fiscal Deficit, Unemployment, Ransom and terrorism and will promote GDP and industrial growth, the necessary ingredients of good governance.
3. What is in the Proposal ? It has FIVE point of actions which are:-
(a) Scrap all 56 taxes including income tax, excluding import duty.
(b) Recall and scrap high denomination currencies of 1000, 500 and 100 rupees.
1. What is the Arthakranti Proposal and who has given the proposal?
2.The proposal has been given by a Pune (Maharashtra) based “Arthakranti Sansthan” which is an Economic Advisory body constituted by a group of Chartered Accountants and Engineers. This concept has been patented by the Sansthan. They reiterate that it is an effective and guaranteed solution to prevent Black Money Generation, Price rise and Inflation, Corruption, Fiscal Deficit, Unemployment, Ransom and terrorism and will promote GDP and industrial growth, the necessary ingredients of good governance.
3. What is in the Proposal ? It has FIVE point of actions which are:-
(a) Scrap all 56 taxes including income tax, excluding import duty.
(b) Recall and scrap high denomination currencies of 1000, 500 and 100 rupees.
(c) All high value transactions to be made only through banking system like cheques, DDs, online and electronic.
(d) Fix limit of cash transactions and no taxing on cash transactions.
(e) For govt revenue collection, introduce single point tax system through banking system – Banking Transaction Tax (2% to 0.7%) on only credit amount
4. The important points to note are:-
(a) As on today the total banking transactions is more than Rs. 2.7 lakh crores per day amounting to more than Rs. 800 lakh crores annually.
(b) Less than 20% of the transactions is made through banking system today and more than 80% of the transactions are made in cash only, which are not traceable.
(c) 78% of the Indian population spends less than Rs. 20/- daily so what's the need for 1000/- rupee notes or in other words, the high denomination notes?
5. What will happen if All THE FIFTY SIX Taxes, including income tax, are scrapped ?
(a) Salaried people will bring home more money which will increase the purchasing power of the family.
(b) All commodities including Petrol, Diesel, FMCG will become cheaper by 35% to 52% .
(c) No question of tax evasion so no black money generation.
(d) Business sector will get the boost and consequently, self employment.
6. What will happen if 1000/ 500/ 100 Rupees currency notes are recalled and scrapped?
(a) Corruption, through cash transactions, will stop completely.
(d) Fix limit of cash transactions and no taxing on cash transactions.
(e) For govt revenue collection, introduce single point tax system through banking system – Banking Transaction Tax (2% to 0.7%) on only credit amount
4. The important points to note are:-
(a) As on today the total banking transactions is more than Rs. 2.7 lakh crores per day amounting to more than Rs. 800 lakh crores annually.
(b) Less than 20% of the transactions is made through banking system today and more than 80% of the transactions are made in cash only, which are not traceable.
(c) 78% of the Indian population spends less than Rs. 20/- daily so what's the need for 1000/- rupee notes or in other words, the high denomination notes?
5. What will happen if All THE FIFTY SIX Taxes, including income tax, are scrapped ?
(a) Salaried people will bring home more money which will increase the purchasing power of the family.
(b) All commodities including Petrol, Diesel, FMCG will become cheaper by 35% to 52% .
(c) No question of tax evasion so no black money generation.
(d) Business sector will get the boost and consequently, self employment.
6. What will happen if 1000/ 500/ 100 Rupees currency notes are recalled and scrapped?
(a) Corruption, through cash transactions, will stop completely.
(b) Black money will either be converted to white or will vanish as billions of 1000/500/100 currency notes, hidden in bags without use, will become useless pieces of paper.
(c) Unaccounted hidden huge cash is skyrocketing the prices of properties, land, houses, jewellery etc and hard earned money is losing its value, this trend will stop immediately.
(d) Kidnapping and ransom, “Supari killing” will stop.
(e) Terrorism supported by cash transactions will stop.
(f) Cannot buy high value property in cash showing very less registry prices.
(g) Circulation of “Fake Currency” will stop because fake currency printing for less value notes will not be viable.
7. What will happen when Banking Transaction Tax (2% to 0.7%) is implemented?
(a) As on today if BTT is implemented, the govt can fetch 800 x 2% = Rs.16 lakh crore where as the current taxing system is generating less than Rs.14 lakh crore revenue.
(b)When 50% of the total transaction will be covered by BTT amounting to Rs.2,000 to 2,500 lakh crores, the govt will need to fix BTT to as low as 1% to 0.7% which will boost banking transactions.
(c) No separate machinery like Income Tax department will be needed and the tax amount will be directly deposited into the State/Central/District administrations' accounts immediately.
(d) As transaction tax amount will be very less, the public will prefer it instead of paying huge amounts against directly/indirectly paid FIFTY SIX taxes.
(e) There will be no tax evasion and the govt will get huge revenue for development and employment generation.
(f) For any additional revenue for special projects, the govt needs to only slightly raise BTT, say from 1% to 1.2% and this 0.2% increase will generate Rs. 4,00,000 crores additional fund.
8. The effects if implemented today :-
(a)Prices of every commodity or goods will come down.
(b)Salaried people will get more cash in hand.
(c)Purchasing power of the society will increase.
(d)Demand will boost, which will increase the product supply.
(c) Unaccounted hidden huge cash is skyrocketing the prices of properties, land, houses, jewellery etc and hard earned money is losing its value, this trend will stop immediately.
(d) Kidnapping and ransom, “Supari killing” will stop.
(e) Terrorism supported by cash transactions will stop.
(f) Cannot buy high value property in cash showing very less registry prices.
(g) Circulation of “Fake Currency” will stop because fake currency printing for less value notes will not be viable.
7. What will happen when Banking Transaction Tax (2% to 0.7%) is implemented?
(a) As on today if BTT is implemented, the govt can fetch 800 x 2% = Rs.16 lakh crore where as the current taxing system is generating less than Rs.14 lakh crore revenue.
(b)When 50% of the total transaction will be covered by BTT amounting to Rs.2,000 to 2,500 lakh crores, the govt will need to fix BTT to as low as 1% to 0.7% which will boost banking transactions.
(c) No separate machinery like Income Tax department will be needed and the tax amount will be directly deposited into the State/Central/District administrations' accounts immediately.
(d) As transaction tax amount will be very less, the public will prefer it instead of paying huge amounts against directly/indirectly paid FIFTY SIX taxes.
(e) There will be no tax evasion and the govt will get huge revenue for development and employment generation.
(f) For any additional revenue for special projects, the govt needs to only slightly raise BTT, say from 1% to 1.2% and this 0.2% increase will generate Rs. 4,00,000 crores additional fund.
8. The effects if implemented today :-
(a)Prices of every commodity or goods will come down.
(b)Salaried people will get more cash in hand.
(c)Purchasing power of the society will increase.
(d)Demand will boost, which will increase the product supply.
Tailpiece.
1. From what little I understand about economics and the financial processes, the proposal seems to be the panacea for our problems thus far and seems very simple to implement as everyone, in the country, seemingly has a bank account to facilitate the 'direct bank transfer' of subsidies, implemented by the previous government. Narendra Modi has shown a propensity to chalk out his own strategy for bringing about changes, the size of his cabinet and the clubbing of quite a few ministries and his emphasis on the efficient working of the bureaucracy are refreshing steps in the right direction to convert a 'scam-ridden' situation to a 'skill-in-abundance' situation!
2. And yes, the biggest sporting bonanza in the form of the Football World Cup extravaganza has commenced in Brazil. A month of ecstasy for all footballers!
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