Saturday, 19 November 2016

A Dark Cloud With Gold Lining ?


For the women of India , can the dark cloud of Demonetization , turn out to be one with a " Golden Lining " ?


Could the drive to eliminate BLACK MONEY , result into " Women Empowerment " ?


If you cannot see the connection , please consider the following :


#   Value of withdrawn notes of Rs 500 / 1000 =  Approx Rs 15 lakh*crore


#   Of the above ,(approx ) Rs 10 lakh*crore worth notes are with public ( rest with banks )


#   Of Rs 10 lakh*crore, may be 50% gets returned to RBI ( Approx Rs 5 lakh*crore  )


#   Remaining 50 % may get burnt / destroyed ( Rs 5 lakh*crore )


#   But , at 23 % of GDP , India's BLACK ECONOMY is valued at Rs 39 lakh*crore


#  Which means , Rs 34 lakh*crore ( Rs 39 Lakh*cr - Rs 5 Lakh*cr of Black Cash which got
     burnt ) are in the form of either GOLD or PROPERTY


#  Let us assume that 50 % of that Rs 34 lakh*crore is in the form of GOLD BISCUITS


#  There is no way , RBI can withdraw those GOLD BISCUITS . No demonetization possible !


So , what will the holders of those GOLD BISCUITS do to escape the raids of IT / ED ?


Simple !


Give these ( of course , gradually over a period of few years ) as GIFTS to ladies of the family as " Stri-Dhan ", where Income Tax provisions are as follows :


#  " Gold / Jewellery " are WEALTH and subject to WEALTH TAX


#   If a lady declares in her Wealth Tax return , wealth in excess of Rs 30 lakh, she has to
     pay 1 % Wealth Tax ( even if she has no regular income tax liability ? )



#   During a RAID by IT dept , there can be no seizure of GOLD as follows :

     *  500 gms ( approx 50 tolas , worth Rs 15 lakh ) , in case of " married " women

     *  250 gms ( approx 25 tolas , worth Rs 7.5 lakh ) , in case of " unmarried " women



#  There can be no seizure of ornaments which are already declared in Wealth Tax returns


#  " Stri-Dhan " ( including all Gold Ornaments ) given by parents on occasion of the
    marriage of a girl , is  NON TAXABLE


#   Of India's 810 million adults , approx 405 million are WOMEN


#   Of India's 30 million persons who file Income Tax returns , maybe 5 million are
     women , leaving out 400 million women who do not file Income Tax returns


#   Assume that , 200 million are " Married " and 200 million are " Unmarried " women


#   At the permissible limits of Rs 15 lakh ( 500 gms ) and Rs 7.5 lakh ( 250 gms ),
     between them , they can hold " Stri-Dhan " ( valued at Rs 45 lakh*crores ) , without
     any wealth tax liability !


When 2015-16 year tax returns get filed, expect a large number of women coming forward to file their Wealth Tax returns !


Especially those , who got married during current tax-year !


And what about those ladies whose parents expired , without a formal / legal " Will " ?  Can they say , " Before her death , my mom gave me her jewellery of 500 grams " ?


Could these women, possibly declare their " Stri-Dhan " gifts , in excess of Rs 30 lakh ?


As long as the evil of Personal Income Tax / Wealth Tax continues , expect people to come up with innovative ideas to avoid tax legally


Some will even try to " Evade " tax illegally , like that businessman from Surat who was nabbed at the Airport yesterday , with 2.5 kg of Gold Biscuits , which he had purchased for Rs 90 lakhs ( using OLD notes ), which would have cost him only Rs 60 lakhs in NEW notes !


His idea was to sell this gold abroad in foreign currency - then find a way back through hawala transaction !


What does this portend for some Rs 35 lakh*crore worth of BLACK MONEY , squirreled away by Indians into foreign banks , during past 10 years ?


Will that return to India in GOLD , as " Stri-Dhan " ?  Anybody's guess  !



But if abolition of Personal Income Tax, is considered " too risky " , what stops the NDA government from embedding RFID micro-sensors in Rs 500 / 1000 / 2000 notes ?


That simple / cheap / fast , step could also put a permanent STOP to future generation of BLACK MONEY !

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19  Nov  2016

www.hemenparekh.in / blogs






   

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