Indian Tax Laws - Current & Future

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MehtaRahulC
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Indian Tax Laws - Current & Future

Post by MehtaRahulC » Tue Oct 03, 2017 1:14 pm

I am starting this thread to
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(1) collect economic / political / admin details of EXISTING tax laws in India
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(2) compare tax laws in India with tax laws of countries such as USA , China, Japan etc
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(3) Proposals in taxation that you may have
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It would include ALL taxes such as GST, income tax, inheritance tax, wealth tax etc and taxes on goods such petrol, electricity etc
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One may also write critical details etc about tax laws which have been subsumed or repealed such as excise, VAT, service tax etc.
.

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Re: Tax laws in India / world , and proposed tax laws for India

Post by sbajwa » Tue Oct 03, 2017 1:46 pm

You cannot compare the Taxes in India today with Taxes in developed countries. India became Independent in 1947 when 95% of its population was living hand to mouth (two times food daily) with no income to support the government. British had thoroughly looted India and left its people starving. People could not pay taxes so what India resort to was five year plans with subsidies and foreign help. The subsidies were thoroughly abused by people who gradually came to power and poor were kept poor. In last 70 years scams after scams of Congress (to keep coming back into power) with left support had left people of india totally downtrodden. Now with Social media and internet along with phones we see people are gradually wakening up from the slumber to realize they have been looted. All the while British and other colonies thrived and fueled Industrial revolution.

Compare that to USA

USA had wide natural resources and few people in 1776 when it became independent. 90 years after its independence there was a civil war between Factory owners in North vs. Raw material producing South. USA became prosperous from 1900 - 1930 and then there was wide spread poverty due to market crash in 1930s. USA again arose during world war II producing weapons and supplying to allies, Russians as well as Hitler.

https://www.globalresearch.ca/history-o ... ny/5449378

The American revolution of the 1770s was fueled due to taxes being collected by British king. Thus in the beginning there were very few taxes (like import tariffs, postage,.

https://en.wikipedia.org/wiki/Taxation_ ... ted_States

Only 15% of all money is in Cash in USA., compared to 95% of the money in cash in India before demo (how much is it now?)

All developed economies know how much their each citizen is earning and where they are spending., India cannot as people convert their cash to Gold, Property, etc. So DEMO with GST is a very good move.

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Re: Tax laws in India / world , and proposed tax laws for India

Post by Primus » Tue Oct 03, 2017 1:52 pm

I agree with Bajwa Ji. Cannot compare taxes in two countries with completely different population demographics, economy and social structure. It may not be a bad idea to place a brief summary of existing tax laws in India (many of us are ignorant of those) and perhaps people can suggest ways to make changes that are beneficial to the country in the long run.

Problem is that what is good for me may not be good for you or for the person down the street, so tax discussions are always painful. Witness the drama in the US where the WSJ always bemoans the excessive taxes on the wealthy but WaPo and NYT always want more taxation - their readership reflects the opinion of the columnists and editors.

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Re: Tax laws in India / world , and proposed tax laws for India

Post by MehtaRahulC » Wed Oct 04, 2017 4:28 am

USA has been far far head of India, China and whole world, and one reason imo is that USA has LESS "regressive taxes".
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Lets consider two countries A and B
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Say A is collecting its Govt expenses thru GST, income tax, no wealth tax
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And say B is collectings expenses thru wealth tax , income tax and wealth tax
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Then will tax laws create a DIFFERENCE in economic / manufacturing and thus military strengths of the two countries?
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imo yes. The country B which uses GST will become LESS PRODUCTIVE place for factory owners compared to country A which collects same amount from wealth tax and / or income tax.
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Of course, main stream economists of India, and all leaders of India have opposite view --- they support GST over wealth tax.
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Re: Tax laws in India / world , and proposed tax laws for India

Post by Schmidt » Wed Oct 04, 2017 6:16 am

Wealth Tax in general is a bad idea for the foll reasons :

1. The govt is not assured of a stable revenue stream
2. It goes against the cardinal principle of double taxation - you get taxed on earned income , and again on the assets you have built up
3. It favours people who are current income earners and discriminates against pensioners and retirees who are not earning much.

What happens if the wealth tax imposed is very high in comparison to the annual income you get ( esp for pensioners and retirees ) .Then the person would be forced to liquidate some of their assets simply to pay off the wealth tax , and this is not easy of they have immovable assets

The govt would have to assess the NET WEALTH of a taxpayer carefully ( taking into consideration their loans and mortgages also ) rather than just their properties and assets - and this is will not be easy ,

Asset values fluctuate wildly based on market prices

Finally , some countries do impose a one time inheritance tax so that it reduces inequality somewhat

What would happen is that taxpayers would simply sell of their assets in India and buy properties and assets ( maybe even equities ) overseas to escape the tax dragnet here

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Re: Tax laws in India / world , and proposed tax laws for India

Post by navik » Thu Oct 05, 2017 4:06 am

http://economictimes.indiatimes.com/new ... 946816.cms


there appears to be a proposal to introduce inheritance tax on HNI. I suppose it will be akin to the old Estate Duty. HNI will form family trusts now. But this is against the intention to keep taxes simple.

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Re: Tax laws in India / world , and proposed tax laws for India

Post by MehtaRahulC » Thu Oct 05, 2017 4:27 am

I am against ET = estate Tax = inheritance tax and I support wealth tax ONLY
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Estate Tax proposed in India will NOT apply on wealths of foreign elitemen !! Why? Because they own wealth in India via Mauriritius Banks . The chain is long --- USUK-elitemen own Mauriritius banks , which invest in share market and bond market in India, and their companies owns land , wealth etc. So when USUK-elitemen dies, his wealth in India will pass to his heirs vuia transfer of ownership of shares in Mauritius Banks. But the effective Estate Tax Govt of India will get, on wealth in India, will be 0%
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The inheritance tax that Jayant Sinha (see his own statements in video at https://tinyurl.com/JayantSinha ) is proposing will fall exclusively on Indian elitemen only
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Also, those who can establish FRAUDATIONS (named as Foundations aka Charitable Trusts aka Charitable Mafia) will escape all inheritance tax !!!
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So all in all, Estate Tax = Inheritance Tax is something I dismiss as fraud. I support wealth tax ONLY (and streamlined incomes tax)

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Re: Tax laws in India / world , and proposed tax laws for India

Post by navik » Fri Oct 06, 2017 4:43 am

In my humble opinon, Income Tax alone is adequate. But the present Income Tax Act, needs drastic simplification. The Govt did proposes a Direct Tax Code some time ago but it was even more complex than the present version.
Tax such as Estate Duty, Gift Tax, Wealth Tax are not desirable as they only add to complexity.
Further complexity in taxation leads to non compliance by taxpayers. The slush funds generated go into dark sectors of the economy fueling illegal activites as owners engage in concealing the entire trail of illegal money.
The revenue officials actively conspire to engage in these acts of parking illegal wealth for personal pecuniary benefits. It also leads to unhealthy appreciation of prices of assets which are used to park funds.

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Re: Tax laws in India / world , and proposed tax laws for India

Post by madhub » Tue Oct 10, 2017 9:31 pm

Good calculation.
On a bank deposit of Rs. 2000/- for one year, what you get is Rs. 160/- @ 8% interest.

On a bank loan of Rs. 2000/- for one year, what you pay is Rs. 260/- @ 13% interest.

But when you eat food for same Rs. 2000/- you pay Rs. 360/- @ 18% to Government!!

This is real nice!
Just to remind.. How much we pay for buying an item worth Rs 1000.

Assume that I need to buy an item of base price of Rs 1000.
Assume it attracts GST @18%
I will need to pay Rs 1000 + Rs 180 = Rs 1180 for that item.

Now, I need to earn Rs 1180 first, to be able to pay this amount.

Assume that I am in the 20% Income Tax bracket (income between Rs 5 Lakhs and Rs 10 Lakhs per year).

If I earn Rs 1486.15, then I will have to pay Income Tax of Rs 297.23 (@20%), and a Cess of Rs 8.92 (@3% of the Income Tax), and that will leave me with an earning (after Income Tax) of Rs 1180.

Hence, to buy an item of base price Rs 1000, I need to earn Rs 1486.15.

Which means that I pay Rs 486.15 in taxes on the purchase of an item of Rs 1000.

And that, dear people, implies a tax of over 48.6% paid overall (through both direct and indirect taxes).

Now, this figure will be far higher for items in the 28% GST slab. (It will be 61.2% in total taxes).

And that, friends, is the real cost of money to you.
Got it from whatsapp

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Re: Tax laws in India / world , and proposed tax laws for India

Post by saip » Wed Oct 11, 2017 2:32 am

navik wrote:
Thu Oct 05, 2017 4:06 am
http://economictimes.indiatimes.com/new ... 946816.cms


there appears to be a proposal to introduce inheritance tax on HNI. I suppose it will be akin to the old Estate Duty. HNI will form family trusts now. But this is against the intention to keep taxes simple.
What is an HNI?

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Re: Tax laws in India / world , and proposed tax laws for India

Post by Schmidt » Wed Oct 11, 2017 5:24 am

^^^
HNI = High Net worth individual

But we don't know who would qualify as an HNI as per govt

If you have over 100 Cr , 50 Cr or even just 1-2 Cr ??

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Re: Tax laws in India / world , and proposed tax laws for India

Post by MehtaRahulC » Wed Oct 11, 2017 10:00 am

WT = Wealth tax, some people call it Property Tax. But it is separate from Municipal Property Tax in India, which is seldom linked with property value. WT is linked with wealth value and generally 1% to 3% of wealth value. Municipal Property Tax in India seldom crosses 0.1% of value, and sometimes much lower. Only now, for rented commercial properties , in some cities, it is coming close to 1% of property value.
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No country has put WT on bank FDs, govt bonds etc. Some countries had WT on shares. Most dont. WT will invariably tax land and constructions, and also gold/ jewels one owns. And WT will vary from country to country. WT in India was dismal that WT collection in year ending mar-2013 was below Rs 1500 crore across India. Instead of fixing this WT law, Modiji complete scrapped it.
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So now WT in India is zero. There are only WT proposals from activists --- and they vary widely.
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A summary of WT law I have sent to @PmoIndia is at = https://fb.com/mehtarahulc/posts/10154809049286922
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The full draft in text format = https://fb.com/mehtarahulc/posts/10154809053521922
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The draft in PDF format = see attachment at https://newindia.in/causes/wt/
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In proposal, there is WT on shares which I will dilute. There is no WT on FDs, cash on hand upto limit, bank savings, GoI bonds etc. There is WT on land / construction, which is main. The summary link above all gives a good explanation.
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More importantly, from 1% land value, income tax paid and about 15% of salaries paid to employees subtracted. So one is using wealth, then WT may be zero.
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But if plots or flats one owns are lying vacant, then WT will be heavy on him. He will be forced to rent or sell them. This will drive down land prices. So imo dued to proposed WT, land prices will decrease, rents will decrease, more manufacturing units and shops will come, unemployment will decrease and income tax will increase. The WT I have proposed also applies on land owned by ALL trusts including religious trusts - Hindu, Sikh, Muslim, Christians, ALL. Most countries have WT which exempts trusts.
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So WT will vary from country to country. India has no WT , except peanut Municipal Property Tax. And proposals will vary from activist to activist
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----------------
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Coming ET = Estate Tax = Inheritance Tax in India
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Aviation Minister Jayant Sinha has proposed inheritance tax on wealth above Rs 25 crores. But he also said that wealth shifted into trusts before death will NOT be included in this Rs 25 cr !! The supporters of ET are now saying --- Govt needs money to give macro-economic stimulum to economy i.e. raise govt expenditure and RBI is saying no to deficit , and so lets raise taxes. And then they propose ET has one tax. Of course, Jayant Sinha has been batting for ET since ages --- jan-2014 and even before.
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I oppose ET and support WT only. So I wont say more in ET.
.

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Re: Tax laws in India / world , and proposed tax laws for India

Post by saip » Wed Oct 11, 2017 2:51 pm

About that Tax calculations above, is it not how ALL taxes work? I mean I live in CA which has 9% Sales Tax and some thing like 6% - 9% state tax (which I do not think India has). So even if I am in 20% Fed tax bracket I will end up having to earn more than 1400 to buy a 1000 thingie. Also i do not know that 1000 thingie might have been already been taxed (its constituent parts) before it reached me. So except that it is critical of GST in general what is new about it?

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Re: Tax laws in India / world , and proposed tax laws for India

Post by MehtaRahulC » Thu Oct 19, 2017 10:33 am

saip wrote:
Wed Oct 11, 2017 2:51 pm
About that Tax calculations above, is it not how ALL taxes work? I mean I live in CA which has 9% Sales Tax and some thing like 6% - 9% state tax (which I do not think India has). So even if I am in 20% Fed tax bracket I will end up having to earn more than 1400 to buy a 1000 thingie. Also i do not know that 1000 thingie might have been already been taxed (its constituent parts) before it reached me. So except that it is critical of GST in general what is new about it?
There is no service tax in USA. Sales tax doesnt apply on many goods. The goods on which GST applies is much much longer than US sales tax.
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Also, GST in India is 18% to 28%, while sales tax in most US states is around 9%
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Also, GST law in India creates so called "missing trader problem", which is NOT there in sales tax in USA.
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Also, business and manufacturers in USA can get "sales tax exemption number" in which case they dont have to pay sales tax when they buy goods. In India, this is not there except for SEZs.
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Total revenue US gets from indirect taxes from good and service (other than fuel, electricity, alcohol, tobacco) , taken as % of TOTAL taxes is much less compared to India. IOW, tax system in USA is less regressive compared to India, and creates less compliance burden for small / medium businesses.

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Re: Indian Tax Laws - Current & Future

Post by Aditya_V » Fri Oct 20, 2017 7:57 am

Why were people who were happy paying Excise +CST+VAT =30-35% now suddenly complaining.

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Re: Indian Tax Laws - Current & Future

Post by Sridhar k » Fri Oct 20, 2017 8:20 am

It is because they only paid that for a set of transactions unlike GST which forces them to pay for everything. The rest were black transactions which benefitted the cusumer, the traders and the baboons

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Re: Indian Tax Laws - Current & Future

Post by MehtaRahulC » Fri Oct 20, 2017 11:05 am

Why were people who were happy paying Excise +CST+VAT =30-35% now suddenly complaining.
The previous system of (excise , service tax, cst, vat, entry tax, octroi ) regime was much much worse compared to US system of (income tax + wealth tax). The large factory owners and large traders faced immense harassment in (excise , service tax, cst, vat, entry tax, octroi ) regime. The small factory owners didnt face harassment of excise, and only interstate traders faced harassment of CST and checkposts. But nation as a whole did suffer. The productivity of Indian factory owner is MUCH below US factory owner and one reason was (excise , service tax, cst, vat, entry tax, octroi ) regime . And now it is GST which will keep Indian factory owners LESS efficient than US factory owners (there are other factors too like labor laws, corruption in policemen / courts / ias / leaders etc).
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Apex leaders of ALL parties in India had option to remove (excise , service tax, cst, vat, entry tax, octroi ) and instead levy wealth tax and improve income tax. That would have more than covered the tax shortfall created by removal of (excise , service tax, cst, vat, entry tax, octroi ) . But instead, for some nefarious reasons, apex leaders of ALL parties decided NOT to levy wealth tax, not to improve income tax and instead levy GST. The reason was --- Indian leaders didnt want to levy tax on large landowners. eg Godrej owns some 3500 acres uin Mumbai in alone, which he got from British in 1920 - 1946. At throw away price of Rs 300,000 per sq mt, the total value will be over Rs 700,000 crores !!! And Missionaries own several times that (may not be in Mumbai). Leaders dont want to levy tax on that land, and so leaders decided to levy (excise , service tax, cst, vat, entry tax, octroi ) . And now leaders want to levy GST.
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Excise was harassing large factory owners, and spared the small. CST + checkpost harassed interstate and spared intrastate. GST harass small / medium, due to (1) missing trader problem (2) increasing IT needs (3) increased CA fees and (4)"double taxation on small traders / manufacturers" and also harasses large intrastate. Basically, harassment has shifted from large to small / medium. And TOTAL harassment in GST has increased.
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I am NOT comparing GST with previous (excise , service tax, cst, vat, entry tax, octroi ) . Both are much much worse compared to wealth tax and income tax. Thats why GST supporters never compare GST with income tax or wealth tax and GST supporters insist that we all must confine to comparing GST with excise and etc. They know that of GST is compared with wealth tax or even income tax, then GST will loose. So they insist that "confine GST vs excise " only

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Re: Indian Tax Laws - Current & Future

Post by Aditya_V » Fri Oct 20, 2017 3:03 pm

In a country requiring High Investment plus with legacy High debt burden we need both Direct and Indirect Taxes. Earlier those who complied with the laws were fools and now more people are paying GST, with smugglers suffering as they not able to give the GST credit up the chain. Hence the tax dodgers are doing rona dhona.

We need 5 years of good tax compliance to remove the excessive debt by running 6% GDP budget deficits before tax rates can come down. We need to do this to balance our books thanks to rampant past looting to have a change from the past.

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Re: Indian Tax Laws - Current & Future

Post by KJo » Fri Oct 20, 2017 3:46 pm

Swamy wants India to abolish Income Tax saying it was a source of corruption and there were other ways to get revenue. Do you all in India agree? Seems like a far-out idea.

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Re: Indian Tax Laws - Current & Future

Post by SRoy » Sat Oct 21, 2017 6:30 am

@Aditya_V,

The "rona dhona" is not just coming from tax dodgers, but also from people like us.
We tax payers are paying more as Modi govt. has failed
1. to put in place anti-profiteering laws
2. illogical GST slabs that have made many goods and services costlier
3. despite IT compliance and extra indirect taxes due to a flawed GST we have got nothing on the table in return.

You can of course ignore this as a rant.
Just reporting from ground.

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Re: Indian Tax Laws - Current & Future

Post by Aditya_V » Sat Oct 21, 2017 6:44 am

SRoy wrote:
Sat Oct 21, 2017 6:30 am
@Aditya_V,

The "rona dhona" is not just coming from tax dodgers, but also from people like us.
We tax payers are paying more as Modi govt. has failed
1. to put in place anti-profiteering laws
2. illogical GST slabs that have made many goods and services costlier
3. despite IT compliance and extra indirect taxes due to a flawed GST we have got nothing on the table in return.

You can of course ignore this as a rant.
Just reporting from ground.
Apart from Restuarant Bills what has become costlier after GST?

Sir what about 9 Lakh crore faulty loans given in previous regime, plus 2G scam 1.72 Lakh crore and coal scam 5 Lakh crore + 10 years Interest, thats 21 Lakh crore Interest.

We are paying for letting UPA win in 2004 and 2009 not for voting Modi in 2019, UPA also would have no choice to go on adding taxes as there was no choice left after the loot since 2010-11, now atleast with corruption down you can expect relief after 2020, or people can vote UPA get looted again, have high inflation, stagnation in job market, High housing EMI's etc.

Someone has to pay for the looting of the treasury and Switzerland and Western Banking system, Dubai, China- Macau are not going to come running to us to return the money and jeopordise thier economies. We can arm twist only with a position of economic and Miltary strength which willt ake time.

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Re: Indian Tax Laws - Current & Future

Post by SRoy » Sat Oct 21, 2017 7:03 am

Aditya_V wrote: Apart from Restuarant Bills what has become costlier after GST?
Apart from restaurant bills?
Hello! Everything that is not sold as packaged item is costlier.
India doesn't start and end with mall going crowd.
Aditya_V wrote: Sir what about 9 Lakh crore faulty loans given in previous regime, plus 2G scam 1.72 Lakh crore and coal scam 5 Lakh crore + 10 years Interest, thats 21 Lakh crore Interest.
That too went out of my pocket and other taxpayers like me. Your point being?
And what's has Modi govt. done?
Please do the honours to place data in this forum that illustrates the steps that Modi govt. has done to recover those loans.
May be you are counting loan waivers to bribe the electorate as positive steps?
Aditya_V wrote: We are paying for letting UPA win in 2004 and 2009 not for voting Modi in 2019, UPA also would have no choice to go on adding taxes as there was no choice left after the loot since 2010-11, now atleast with corruption down you can expect relief after 2020, or people can vote UPA get looted again, have high inflation, stagnation in job market, High housing EMI's etc.
Are we answerable for this?
For the first part are you too embarrassed to admit that if the Hindutva types stay home then Modi can shove the "Vikas" mantra where it belongs?

For the second part, if corruption were an issue than UPA should have lost 2009. What did them in was shrinking job market and deteriorating economy that started somewhere in 2011/2012. The massive mandate that Modi got was result of core constituency and the economic turnaround hopefuls voting in tandem. The govt. has failed both.
Aditya_V wrote: Someone has to pay for the looting of the treasury and Switzerland and Western Banking system, Dubai, China- Macau are not going to come running to us to return the money and jeopordise thier economies. We can arm twist only with a position of economic and Miltary strength which willt ake time.
That "someone" has to be the same set of people every time?
Last edited by SRoy on Sat Oct 21, 2017 7:04 am, edited 1 time in total.

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Re: Indian Tax Laws - Current & Future

Post by MehtaRahulC » Sat Oct 21, 2017 7:04 am

Swamy wants India to abolish Income Tax saying it was a source of corruption and there were other ways to get revenue. Do you all in India agree? Seems like a far-out idea.
SuSwa was commerce Minister in around 1991. He never proposed any law in Parliament to remove income tax. And even now, he has never proposed any law in Parliament to remove income tax. He has excuse that he is in RS and money bill cant be proposed in RS. But he can always find one LS MP to present such draft. And he never made his stand clear on corporate income tax. Will that also go? Removing personal income and keeping corporate income tax will only make businessess shift to properietorships. And if both Persona and Corporate income taxes are removed, then how will revenue shortfall be made up? He never made it clear.
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All taxes create corruption and all taxes are bad. Question is --- which tax system is less bad? Income tax creates MUCH LESS corruption than GST, excise, vat etc. And it creates much less problems like missing trader problem, double tax on small dealers etc. And income tax is LESS regressive than GST or excise or VAT or sales tax. And WT is less bad than income tax. But WT may fall short and so IT is needed along with WT. But GST , excise etc can be scrapped.
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As such, in 1998, SuSwa worked for BIF. He worked to bring down ABV Govt (which at least did good things like Pokharan-1 and not allowing FDI in insurance etc). SuSwa even said that "SoGa , Jayalalitha and Mayawato are Ganga , Jamuna Saraswati" !! see http://www.rediff.com/news/1999/apr/17swamy.htm . SuSwa was ready to make SoGa as PM in 1998 !! And in 2012 - 2013 , SwSwa had said that he will file charges against SoGa in courts and soon SoGa will be in prison !! So SuSwa has serious issues. And so on serious issue like tax system, its best we ignore what SuSwa says.
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So yes, it is possible to remove income tax by increasing GST. But that will imo ruin India's factory owners and Indian economy.
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--------------
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The "rona dhona" is not just coming from tax dodgers, but also from people like us.
We tax payers are paying more as Modi govt. has failed
1. to put in place anti-profiteering laws
2. illogical GST slabs that have made many goods and services costlier
3. despite IT compliance and extra indirect taxes due to a flawed GST we have got nothing on the table in return.

You can of course ignore this as a rant.
Just reporting from ground.
.
At this point, I will say that my rona dhona is NOT about GST rate. Low rate will cause revenue shortfalls and high rates will upset buyers and increase evasion. So imo complaining against GST-rate is non-issue in general.
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The goods became expensive because a large number of manufacturers kept on-book revenue at Rs 1.40 crore because excise starts at Rs 1.50 crore. So their products were free form excise. Now GST = excise + vat + cst = 18% . But a large number of units which were below excise turnover limit are now above GST' composition limit. And so 18% GST applies. So effective tax on many goods shot up.
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But again, that is NOT my major complain. The previous excise system harassed large factory owners and now GST harasses all, but harassment on large has decreased.
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My rona dhona is about fundamentally deliberate bad choice. Leaders could have opted for wealth tax instead of GST or (excise + servicetax + cst + vat combo of past). But due to nefarious reasons, all leaders opted for GST and not wealth tax. And as a result, Indian factory owners will remain LESS productive than US factory owners
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-----------
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The main reason Govt since 1950s pushed more for indirect taxes was because the leaders of ALL parties did not tax on land.
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Godrej ---- 3400 acres in Mumbai alone ..., Throw price of Rs 400,000 per sqm , total = Rs 700,000 crores
Tata --- 10 times Godrej (not in Mumbai now)
Plus Sarabhai or ahmedabad, and 100 - 200 such familes who got huge amount of lands in 1940s from British
And missinaries, who have twice more urban land than all above added
Plus ex-kings
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"Leaders" dont want to tax their land. And so "leaders" of ALL parties want excise, cst , vat, service tax, and so GST mess was a natural fall out

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Re: Indian Tax Laws - Current & Future

Post by Aditya_V » Sat Oct 21, 2017 3:22 pm

But wasn't hypocritical that the earlier excise limit was being exploited with having 10 entities paying 1.4 crore plus cash turnover say 30% 60 lakhs. So there people having 20 crore turnover of which 14 crore in white 6 crore black money plus 1 crore white money escaping the tax net?

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Re: Indian Tax Laws - Current & Future

Post by MehtaRahulC » Sat Oct 21, 2017 4:31 pm

Aditya_V wrote:
Sat Oct 21, 2017 3:22 pm
But wasn't hypocritical that the earlier excise limit was being exploited with having 10 entities paying 1.4 crore plus cash turnover say 30% 60 lakhs. So there people having 20 crore turnover of which 14 crore in white 6 crore black money plus 1 crore white money escaping the tax net?
The small and medium nanufacturers have to compete against super large companies like Godrej , Tata, Sarabhai (of ahmedabad) , Hindustan unilever etc get
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These super large comapnies get natural resources for pittance. eg Tata pays has been paying a princely sum of Re 1 per year per ACRE (yes, per ACRE, not per tonne) from his coal mine in Jharkhand since 1946 as royalty. So cost of coal for Tata is mere Ts 200 per tonne , i.e. cost of mining coal. Whereas small / medium businesses have to pay Rs 2000 per tonne to Rs 10000 per tonne for coal.
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Next price of land. The super large companies get land for defacto free. eg Godrej has 3400 acre = about 1,40,00,000 sqmeter = 1.4 crore sqmt of land in mumbai alone. Plus land in Thane and all over India. They got all this land from British in 1920-1946. So if Godrej wants to starts a unit in Mumbai , the land cost = 0. And if it wants to start unit elseweher, then it can sell some land in mumbai and buy elsewhere and against defacto cost is zero.
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How much does land cost to Hindustand Unilevel? Along with tons of lands it got from British ages ago, ABV in 1997 sold a PSU company called as Modern Food to Hindustan Unilevel for Rs 2000 crore. And at that time, Modern Food had plots worth Rs 20000 crores (by that day's price) in Delhi ALONE !!! And ABV and Arun Jetley said "we take book value of land" !! i.e. Modern Food had got land in 1960 and that value was taken.
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And when ABV in 2002 sold VSNL to Tata for mere Rs 8000 crore, VSNL had lands over Rs 30000 crore in Mumbai alone !!
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And small medium businesses mostly dont get loans from PSU banks and depend on private funding. The interest rate s 2% per month to 4% a month. Wher as large companies get at the rate of 1% to 1.5% a month, and they are free not pay (ag Adani has NPA of Rs 100,000 crores).
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And in addition, super large companies' owners are better positioned to bribe PM, CM, apex-Ministers, apex judges, apex IAS and pay apex-mediamen.
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IOW, small medium manufactures have to pay higher price of natural resources, MUCH MUCH higher price for land , interest rate, and get less favors from apex Nbjpri.
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So much for complaining against small medium manufacturers
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So yes, many small manufacturers had done "cash sales" and also "company splitting" i.e. if revenue is Rs 10 crore then will do Rs 5 crore cash and split business into 4 companies keeping each at Rs 1.40 crore or less. But when you count price of natural resources, land obtained from British and land bought today, and interest rate with option of NPA, then small medium businesses paid much higher input prices.
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So solution was - remove excise and instead levy wealth tax. Not curse manufacturers for company splitting. The excise law was wrong - and that law should have been removed.If excise is removed, they would have never resorted to company splitting and would have grown at faster pace (because company splitting does reduce efficiency of factory owners as well as whole nation).
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And as I said, excise was wrong on large maufactures and so excise should have been removed. (This has been my stand since 2004, not now).
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Now that small medium manufacturers are dying due to GST, we will see unemplyment rise and foreigners takeover. Because Indian large company owners DO NOT have tech or capital to expand. And so only foreign company owners will be able to expand. And they will hire much less staff per crore of production. So unemployment is rising and will rise further. The only solace is that youth will get jobs, and much of unemployment increase will be in 35 years plus age group, and will be in informal sector. So statistics will look good, because statistics doesnt cover employment in informal sector because ... it is informal.

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