01 December 2018

Can Personal Income Tax Be Abolished in India

Dated : 01-Dec-2018 Saturday New Delhi India

In India the whole concept of black money generated by people evading income taxes is highly flawed ! There are two thinking process to this problem one philosophical, ethical, devotional, scriptural, belief in next life reincarnation, doctrine of Karma & other purely materialistic charwaka school of thought ! In short Karmis !

The first school of thought (SoT) comprises of those solely in the teaching, academic, advisory, priestly professions where both job opportunities & in job money making cannot be done by dubious ways !

They have accepted the fact very early in life that nothing is permanent all is temporary & one's own money is really not one’s own but Lord Krishna's & in the end, one can take nothing, with them, when they leave this planet ! Death + Income Tax only truth in life rest all is Flux !

So such people, have respect for the law, know the Income Tax Act backwards, with clear, clean, understanding and have no problems in declaring there true Incomes 100% & paying the Taxes ! They have toiled and come up in life the straight forward way & know the value of each Rs ! My parents, my eldest aunt ambhujham & myself are such examples !

I adopted the idea that if I pay my Income Taxes honestly then I can't afford marriage & stayed single as a monk ! I adviced my Halwa Poori, Tabla, Bansoori (Flute) Nandi, Cousin Sri Krishna Chandra Pantha of 27 years who started his career in DMRC 2 years ago also in the same way !

Such persons feel that better not to increase income & pay tax rather than increase income & pay tax ! Earn that much which can be kept below the tax savable limit or that which is required for not having to skip three meals a day + basic medical care.

A roof over the head, power, water, sanitation, Fixed line + basic gsm phone Internet ! In short less money + more time & Vice Versa !

There are many people who don't want more work or more money & pay more tax especially in India where wastage of Tax money is rampant !

Such people after paying/saving Income Taxes honestly will never be seen in high end malls, buying designer clothes, clutches, branded sunglasses, watches, I phones, Luxury Cars, Foreign Travel, Credit Card holding usage etc ! 

They will be more of safe savers than conspicuous consumers ! They can never understand the terms “Disposable Income” or taking a “Loan” or a thing on "EMI" & would be living within their means ! Zero Debt Life ! 

At present I'm wearing an Adidas Full Sweater donated to me by my neighbour as it was out of Fashion for him !

Till date I don't have a bike/car ! I’m using a 1985 Rs 550/- AVON 20″ Bicycle for my commute, purchased second hand from my neighbour in 1998 for Rs 150/- & a Hero Street Racer MTB cycle received as gift from my uncle for free in April 2016 whose purchase price would be Rs 5,000/-.

My mother used public transport bus for 40+ years & now uses CNG Auto & we paid Rs 5 L+ in Income Tax for FY 2017–2018 as all our income was via bank accounts only ! We live in our own,a modest 1200 sq feet DDA MIG Flat of 1978 construction in Central Delhi !

I remember in FY 2005-2006 when I'd gone to submit my Mother's I.Tax return in paper to our local office the receiving clerk created objection that the Salary Form 16 didn't 've the rubber stamp seal of the employer. I asked him to put the case in scrutiny if he wanted to do so and he was shell shocked & accepted the return.

But the case was picked up for scrutiny for some other lame reason & mis-information received by the Tax Department. It continued for 10 months & in the end return filed was accepted as nothing was detected and closure assessment order was issued. But meeting the JCIT was really an experience & he was stunned when I could explain each & every thing with documentary proof to him added with philosophy. After 2 hearings by just looking at my face, he mellowed down, his Post Ego crashed, conclusion, that we were genuine people & himself asked my mother not to come personally as there 'd be no further summons.

He didn't understand one simple thing ? That a person in such a long, high, academic profession, filing returns for the last 40+ years,how  she could be a tax dodger ?  His vedanta on us was that we were escapists but it was a virtue also.

The 2nd SoT belongs to Karmis i.e lawyers, CA, businessmen, politicians, actors, bureaucracy etc ! They have never & can never be honest straight forward in anything as money + matter is the only goal of their life & have attained everything via crooked twisted means & have loved circumventing the system will do so till eternity !

So such people can never become honest Income tax paying people ! Why ? They have only one life & have to make the most out of it + to leave their wealth to their next generation +Their professions on a daily basis require them to make so much daily expenditure of their incomes where they end up paying a lot in indirect taxes to the govt as GST !

So the trade off is between Direct personal Income tax (DPIT) Vs GST ! If someone earned Rs 5L+ as commission in cash in a real estate deal & evaded it in their Income Tax Return but used the same to construct two rooms in their office or bought Gasoline for their vehicle the Govt got GST in everything that they purchased !

In some cases more than DPIT Rate ! The Govt doesn't lose any revenue anywhere as it claims by Income Tax evasion by people !

What it wants now is to milk people both ways in Taxes ! DPIT + GST ! It wants the salaried class to pay 31.20% Income Tax, 28% GST on New Vehicle purchase & Rs 36 Tax on each litre of petrol ! 

So nearly 50% of Income of the salaried class is going in Taxes with nothing commensurate received in return from the Government in terms of Medicare, Old Age Home Benefit which has again to be footed by oneself from post tax income.

Demonetisation was done only for untaxed cash hidden for years for the rainy day ! Another hue & cry about people evading personal income tax is a charade ! When the I.T department doesn't 've the resources or man power to scrutinize each & every return filed even for Rs 1,000/- Tax Evaded per return (x) no of returns filed then why so much effort in improving compliance & creating fear in people ?

It is just like 100 people applying for a I.Tax Commissioner's Job & all 100 getting selected W/o their Exam papers being evaluated. 

For any form of loan receipt, property sale advance, loan repayment the maximum cash transaction limit is Rs 20,000/- For Business Expenses Rs 10,000/- For cash deposit in Bank Account without PAN # it is Rs 49,999/- but for other cash transactions like buying Gold without PAN # name it is Rs 2 Lakhs per day. 

By having varying figures for cash transactions, Does this portray a Govt seriously interested in curbing tax evasion & promoting Digital currency ?

Most of the DPIT evasion is happening through legitimate banking transaction channels & not via petty income earned via cash transactions in the unorganised sector !

The Govt uses compulsory TDS @ 10% (Even for those in 5% I.Tax Bracket) as a tool by presuming that all income earners are potential tax evaders & making Form 15-G/H (For those having only interest incomes) conditions contrary to Section 80/87A of Income Tax Act & ineligible even for those who can legally save tax upto an income of Rs 10 Lakhs (Check YouTube Video's on this) when in the end it has to refund the entire TDS with Interest as Tax Due is nil. 

For somebody earning Rs 10 Lakhs annually only via term deposit interest, Rs 100 K 'll be compulsory TDS but if earned via Salary & Tax Savings Proofs submitted to Employer then NIL Tax Payable & Nil TDS ! Again if somebody kept Rs 3 Crores in a Savings Bank account & got Rs 10,50,000 as annual interest, there is no TDS, but the assessee has to pay the required tax himself on self assessment.

By using compulsory TDS the Govt is in one way encouraging tax evasion. Even if an individual assessee is honest & willing to the pay the tax due by way of Advance or Self Assessment Tax before 15th March,but the person deducting TDS is not, and doesn't deposit the TDS in Govt account/PAN # of the assessee then the assessee has no other way but to evade the income earned (if all rectification efforts fail with the deductor till due date of filing of return) as it is not reflected in their form 26AS. The weakness of all Govt's are that they are vast bureaucracies, they work on the priniciple, that what is not on the file doesn't exist.

Such contrary rules exist together & India has the best of IAS IRS UPSC Civil Exams ! 

In Kali-Yuga the rulers 'd be just tax plunderers. This present govt headed by Neecha Aadmi is proving it in toto with the above form TDS rules.

So those who understood the Govt’s charade, tricks, plan their way of life, income, expenses, savings accordingly ! Those who read the Bhagavad Gita & Srimad Bhagavatam of A C Bhakti Vedanta Swami Prabhupada very early in life know this !

For example to avoid GST I use doordarshan free DTH service & travel by sleeper class in trains ! I've never had food once in my life in a McDonald's domino's pizza hut where I've to pay GST & instead relied on my neighborhood kulchcha cholley, tandoor roti sabji wallah [Street Burritto Vendors]!

I.M.H.O even if all declared their true Incomes & paid their taxes honestly in India DPIT cannot be abolished in India for the next 50 years as no Govt wants to reduce it's own wasteful expenses & want's to continue with it's loss making Co's like Air India,BSNL,MTNL,ITI plus crores wasted in Lok Sabha Rajya Sabha disruptions.

At the most it can be simplified by increasing basic DPIT exemption limit to the GST limit of Rs 20 LPA[US $ 28,570 p.a], reducing, compliance burden for low income earners, removing all deductions, chapters, exemptions & making a clear definition of as to “What Constitutes Income”/Taxing All forms of Incomes like Gifts, Inheritance,PPF Interest ! No income should be tax exempt !

I never understood the logic in DPIT of having different heads of incomes, additions, subtractions, deductions, reliefs, rebates. An Income is an Income, Why have two words or varying definitions for the same thing ? 

Reducing the DPIT Act to 10 A4 size pages & having one single rate of tax @ 16% both for GST & DPIT ! Domestic savings +  necessary expenses both will increase leading to higher indirect taxes & life will become much easier & compliance burden reduced with more free time for “Other Worldly Spiritual Pursuits”.

Just have one basic exemption limit for all ! Beyond that everyone pay's Tax @ 16% and relaxes. As tax rate is low & all incomes are taxed there is no scope for litigations due to varying interpretations. At present one has to keep the I.T Act in mind before doing any transactions even with close family members ! 

The entire GST failed because of multiple rates & multiple HSN Codes ! A stone age view was that Food Biscuits should attract 18% GST for people to buy/consume from Tax paid Income & Gold Biscuits Gems Jewellery Diamonds @ 3% for those buying in cash upto Rs 2 Lakhs !  

Income Tax Evaders 'd park their evaded wealth/tax in Britannia Bourbon, Parle Hide N Seek, Unibic Ginger Biscuits for future generations beating inflation or in Gems Gold Jewellery ?

GST @ 12% on Roadster Bicycles tells us how serious the Govt is in cleaning up the Environment, reducing dependence on Crude Oil & helping the poor downtrodden class.

But No ! Simplicity is never in the DNA of any Govt or It's Administration in India.

If consumption of goods & services increases our factories will run @ 100% capacity creating direct indirect employment.

Another factor, against abolishing personal income tax, is a huge Job market, thriving behind it, of CA's, TDS return filers,PAN card NSDL,Tax Return preparers who would be rendered without work & income.

No economist wants to admit the truth on TV that if India has to solve it's problems either it should cap it's human population growth[The one rebate in DPIT which no Finance Minister in India ever thought about was to give 100% Tax exemption for monks or society people who chose not to have children voluntarily] or increase its GDP to grow @ 11% p.a for next 20 years to satisfy it's young population's aspirations.

Now GDP growth of 11% p.a can't be achieved by honest income tax paying populations unless all become "Krishna Conscious" ! It can be achieved only by tax evaded incomes splurged on consumption led growth ! A peak DPIT Rate of 35.88% [35+15+4 %] at present 'll always lead to income concealments & tax evasions.

But such out of the box ideas cannot be implemented by this Govt even till 2024 when this useless, self pity, megalomaniac, chaiwaala, bakolia, shameless, remorseless, neecha aadmi{who inflicted utmost misery on the poor, downtrodden, helpless, working class, farmers, by his pigeon brain, idea of demonetisation, with no commensurate benefits in tax collected}but his own party men in Karnataka state,were spending 500 crores, on their daughter weddings, during Demonetization, who attends celebrity actress weddings, whose knowledge of economy, finance, taxation, is just of the size of a postal stamp,who has to wear Rs 1 crore suits + undertake everyday foreign travels. His close industrialist friend spent 700 crores on his daughter's marriage ! 

It would take too much courage & gamble on the revenue fiscal deficit fronts like another demonetisation ! But if taken, it would bear fruits, over time, better than demonetisation by earning the goodwill of people.

Swami Aniruddha !

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