Re: Indian Tax Laws - Current & Future
Posted: Sun Oct 22, 2017 3:27 am
It is customary amongst apex leaders of all parties , all political party workers and all SALARIED people to brand all SMMTO = small medium manufacturers and traders owners as tax evaders , criminals , chor ( = thieves) etc. And in contrast, these leaders , salaried people etc project LMBO = large manufactures traders owners as good guys, people who pay all due taxes and so on.
.
Much depends on what one wants to see and what one does NOT want to see.
.
The small / medium company owners evaded excise by (1) under reporting sales by 40% to 80% by doing that business in "no bill, no excise all cash" basis and (2) split company into 2 or 3 or 10 companies, each company showing on-paper revenue beloe Rs 1.50 crore. The large could NOT have split company into 500 units and so they paid excise
.
Likewise, service tax had rule that a firm with service below Rs 10 lakh will be taxed at 0% and 15% thereafter. So many service providers did company splitting
.
Now lets see the benefits that large owners get over small owners
.
(1) Large manage to get natural resources at pittance price - eg Tata pays Re 1 per year per ACRE royalty from his coal mine in Jharkhand. It went on from 1946 till 2015, and dont know current status. Whereas small / medium have to pay Rs 2000 per tonne of coal to Rs 10000 per tonne
.
(2) Most large got huge amount of plots from British before 1946. eg Godrej has 3400 ACRES = about 1.3 crore square meter of land in Mumbai alone, which it got from British before 1946. And same for about 200 families who were loyal to British
.
(3) Even after 1947, large continued to get huge amount of land from pittance from ALL Govts -- no matter which party was ruling. eg ABV sold PSU Modern Food to Hindustan Lever for Rs 200 crore , while MF owned land worth Rs 2000 crore market price of THAT day in Delhi alone !! And MF owned huge plots across India. So Hindustan Lever got all that land for pittance. And Congress govt too has a LOOONG list
.
(4) Most small/medium dont get bank loans and depend on private loans where interest is 2% to 4% a month. Many small even end up paying 5% to 10% (and very small end up paying 30% a month !!) . While large get loans for 1% to 1.5% a month from PSU banks and they have option not to repay by creating NPA !!
.
(5) apex-Ministers, apex-IAS, apex-judges all prefer to favor large over small
.
(6) Foreign large were one step ahead --- thru Mauritius treaty they got tax exemption on income, capital gains and what not
.
Now small / medium manufacturers have to compete against large.
.
And so they exploited whatever loopholes they can --- cash sales, company splitting etc
.
----------------
.
Now why did leaders across parties, and IAS / judges gave such nefarious benefits to large? Obviously, because these Nbj got nefarious favors in return.
.
Now many salaried people insist that ONLY the tax-evasion that small-medium do should be seen and the nefarious favors that large are getting and nefarious favors that leaders/IAS/judges got should NOT be discussed !!! And this is particularly true for those who get hefty salaries and are associated with large company owners
.
And thats precisely the logic behind "no discuss wealth tax, focus ONLY on GST vs excise comparision" !!
.
And salaried people have a great argument in favor of large --- see , the large are NOT breaking any law by not paying wealth tax on their miles of plots. Because there is no wealth tax on trusts !! The arguments looks like "see, British never broke any law in India" !!!
.
-----------
.
But when national interest are to be seen, one should see that nefarious favors that large get are doing far far more damage then cash sales and company splitting. And cash sale and company splitting increased because of laws like excise , CST, vat, service tax and NOT LESS due to income tax. And wealth tax prompts ZERO cash sales and company splitting. The pro-GST people at the end of the day ONLY want to curb tax evasion and not fix the fundamental flaws that tax system has "dont tax land, tax goods heavily and moderately tax income" where as it should be opposite-- "land should be taxed more, income as moderate rate, and goods at lowest or zero rates".
.
Much depends on what one wants to see and what one does NOT want to see.
.
The small / medium company owners evaded excise by (1) under reporting sales by 40% to 80% by doing that business in "no bill, no excise all cash" basis and (2) split company into 2 or 3 or 10 companies, each company showing on-paper revenue beloe Rs 1.50 crore. The large could NOT have split company into 500 units and so they paid excise
.
Likewise, service tax had rule that a firm with service below Rs 10 lakh will be taxed at 0% and 15% thereafter. So many service providers did company splitting
.
Now lets see the benefits that large owners get over small owners
.
(1) Large manage to get natural resources at pittance price - eg Tata pays Re 1 per year per ACRE royalty from his coal mine in Jharkhand. It went on from 1946 till 2015, and dont know current status. Whereas small / medium have to pay Rs 2000 per tonne of coal to Rs 10000 per tonne
.
(2) Most large got huge amount of plots from British before 1946. eg Godrej has 3400 ACRES = about 1.3 crore square meter of land in Mumbai alone, which it got from British before 1946. And same for about 200 families who were loyal to British
.
(3) Even after 1947, large continued to get huge amount of land from pittance from ALL Govts -- no matter which party was ruling. eg ABV sold PSU Modern Food to Hindustan Lever for Rs 200 crore , while MF owned land worth Rs 2000 crore market price of THAT day in Delhi alone !! And MF owned huge plots across India. So Hindustan Lever got all that land for pittance. And Congress govt too has a LOOONG list
.
(4) Most small/medium dont get bank loans and depend on private loans where interest is 2% to 4% a month. Many small even end up paying 5% to 10% (and very small end up paying 30% a month !!) . While large get loans for 1% to 1.5% a month from PSU banks and they have option not to repay by creating NPA !!
.
(5) apex-Ministers, apex-IAS, apex-judges all prefer to favor large over small
.
(6) Foreign large were one step ahead --- thru Mauritius treaty they got tax exemption on income, capital gains and what not
.
Now small / medium manufacturers have to compete against large.
.
And so they exploited whatever loopholes they can --- cash sales, company splitting etc
.
----------------
.
Now why did leaders across parties, and IAS / judges gave such nefarious benefits to large? Obviously, because these Nbj got nefarious favors in return.
.
Now many salaried people insist that ONLY the tax-evasion that small-medium do should be seen and the nefarious favors that large are getting and nefarious favors that leaders/IAS/judges got should NOT be discussed !!! And this is particularly true for those who get hefty salaries and are associated with large company owners
.
And thats precisely the logic behind "no discuss wealth tax, focus ONLY on GST vs excise comparision" !!
.
And salaried people have a great argument in favor of large --- see , the large are NOT breaking any law by not paying wealth tax on their miles of plots. Because there is no wealth tax on trusts !! The arguments looks like "see, British never broke any law in India" !!!
.
-----------
.
But when national interest are to be seen, one should see that nefarious favors that large get are doing far far more damage then cash sales and company splitting. And cash sale and company splitting increased because of laws like excise , CST, vat, service tax and NOT LESS due to income tax. And wealth tax prompts ZERO cash sales and company splitting. The pro-GST people at the end of the day ONLY want to curb tax evasion and not fix the fundamental flaws that tax system has "dont tax land, tax goods heavily and moderately tax income" where as it should be opposite-- "land should be taxed more, income as moderate rate, and goods at lowest or zero rates".