Shakespeare would say , " That is the question
"
For Federal Reserve Board of Revenue ( Pakistan ) ,
that question was ,
" What to
publish ? And what not to publish ?
"
It seems , in Pakistan , only 1 million people [ out of
a population of 140 million ] , pay income tax
Finally , the Board published the names of those 1
million ( running into a 17,000 page directory ) , with the amount of tax paid
by each
To give to Pakistan , a loan of $ 6.7 billion ( approx
Rs 41* Thousand * Crores ) , the
International Monetary Fund ( IMF ) , insisted on such a publication
Now , in India , we have 40 million people who pay
personal income tax ( out of a population of approx 1220 million )
Obviously , for India's Income Tax Department , it
would be an impossible task to publish their names in a directory - which could
possibly run into 17,000*40 pages !
Then again , India has no need for an IMF loan , what
with its Personal Income Tax revenue amounting to , Rs 2.47*Lakh*Crores
And if the incoming government at the Centre , dares to
implement my suggestion of INVERSE TAXATION regime , that revenue could go up
100 times !
Simply , " Inverse " the tax slabs as follows
:
> Up to
Rs 2 lakhs..................... NIL
> 2.1 - 5.0 lakhs...................... 10 %
> 5.1 -
10 lakhs....................... 8 %
> 10.1 - 20 lakhs...................... 6 %
> 20.1 -
50 lakhs..................... 5 %
> 50.1 - 100 lakhs..................... 3 %
> Above 100 lakhs...................... 1 %
What is likely to happen with such " INVERSE TAXATION " regime
?
Following few things :
> Total
personal tax payer base will go up dramatically from current 4
crores
tax-payers
> Total
personal tax collection too , will rise dramatically
> with this
" INVERSE TAX REGIME " , there will be no incentive
to evade
taxes and to
generate " BLACK MONEY "
> There will
be no resistance to accept ALL payments by cheque / electronic
clearance !
> The more you disclose as your income , the
less you pay by way of taxes
( Of course
, incrementally )
> For a
change , we will learn to reward honesty / efficiency / productivity !
No need to
bribe those Income Tax officers !
> Lakhs of
crores of BLACK MONEY , stashed away in bank
lockers / gold
/ land - and , of course those Swiss bank accounts - will ,
become
" WHITE MONEY " , overnight !
> There will
be a huge surge in bank deposits ( - even with , the inevitable
lower
interest rates )
> Banks will
be awash with funds to finance businesses / infrastructure
projects etc
, encouraging entrepreneurs / self-employed to set up new
businesses (
at 2 % interest rates of loans ) and generate millions of jobs
> There will
be a phenomenal rise in Capital Markets
Only questions are
:
> To innovate
or not ?
> To think
out-of-the-box or not ?
> To feed poor
or to teach them how to fish ?
> To enable
people to earn more or to subsidize their expenditure ?
> To let
people stand on their own legs or continue "Dependency Culture" ?
> What is
possible ? To reverse the human greed or
try and harness it ?
* hemen parekh
( 18 April 2014 / Mumbai )
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