That about sums up the desire of the NDA government
It wants to rid the economy of the Cancer of Corruption , but also wants to retain those
high denomination notes for the convenience of common citizen ( ! )
There is only ONE WAY both of these objectives can be
achieved simultaneously
By totally abolishing Personal Income Tax !
By simply removing the " Incentive / Motivation
" for tax evasion
Why would anyone want to hide his income, if there was
no tax ? Let the World know !
If that lack of privacy makes some people uncomfortable,
they can keep their wealth a secret and we must respect their desire ( knowing that
, Artificial Intelligence won't ! )
Remember , in itself , a note of Rs 1000 is
not BLACK . If the owner of that note has paid
tax on that income , it is WHITE
So , the issue is not to withdraw notes . Issue is to
find out whether the owner has paid tax on those notes, or not
If a citizen has 100 notes of Rs 1000 ( Rs 1 lakh ), either in his cabinet at home or in his
locker in the bank , IT / ED would not want to waste their time , trying to
locate it / count it / tally this amount with that owner's tax returns , to conclude
whether that amount of Rs 1 lakh was " disproportionate to his known
source of income " or not
IT / ED can safely conclude that this is WHITE money
Now, if a citizen has 10,000 notes of Rs 1000
each ( Rs 1
Crore ) , but his tax returns show a taxable income of only Rs 5 lakh ,
that would be sufficient indication that
* the amount " un-earthed ", is "
disproportionate to his known source of income "
* must have been
received from " Unknown Sources of Income ",
* no tax has been paid on it
* it qualifies
to be called " BLACK MONEY "
To reach the same conclusions, extrapolate this logic
to locating Rs 20 crores worth CASH, in the
cabinet / locker of a person , whose latest tax return shows a taxable income
of only Rs 1 crore
HENCE
, THE TRICK IS :
* Locate those huge hoards of
CASH , concentrated in a small area ( say , 1 sq meter )
* Find out to
whom those accumulations belong ( the owners )
* Compare /
tally these amounts with the tax returns filed by those owners
* Carry out
these 3 steps AUTOMATICALLY
( without
human intervention ) with the help of
latest
technology ( IndiaStack platform + RFID sensors
embedded in notes )
* Seize those
amounts where the ratio
( CASH found , divided by last taxable income
claimed ) exceeds 20 ( or whatever IT / ED
prefers , after making ABC analysis )
WHAT IS
THE NEED FOR
SUCH TRICK ?
NDA government has following objectives :
# Destroy already accumulated BLACK MONEY
Far from
being foolproof , current act of withdrawing Rs 500 / 1000 notes , will take
care
of this to SOME extent , although it will mean
a lot of inconvenience to honest people /
huge administrative costs / possible temporary
drop in GDP % etc
Of course ,
owners of huge amounts of BLACK ( untaxed ) CASH , are already finding
innovative
methods to convert their OLD notes into NEW notes !
At best ,
this objective will get served ONLY PARTIALLY - and temporarily
# Stop future generation of BLACK MONEY
As far as
this objective is concerned , not only is the current step , TOTALY INEFFECTIVE
, it is downright RETROGRADE through introduction
of NEW notes of Rs 2,000 !
Within 6
months , it will be BUSINESS AS USUAL , for the Black Marketers - and
with
greater ease / convenience , using lesser
number of notes to stash up ever larger
amount of CASH , in even smaller bank lockers !
Sure , BOTH of these objectives could be met SIMPLY / ELEGANTLY
/ SIMULTANEOUSLY , by abolishing Personal Income
Tax
But that would never happen as long as matters of ECONOMY are left to the mercy of the learned Economists !
BUT ,
If you want to have the Cake ( continue with high denomination notes
),
AND
Eat it too ( ALSO stop future generation of BLACK MONEY ) ,
THEN,
Your ONLY solution is to embed those high denomination
notes with RFID chips !
Even if NDA succeeds in fooling the Bankers and sundry,
learned Economists, it won't be able to fool the ordinary citizens !
It is still not too late to ditch the Economic Advisors
and listen to the ordinary citizens !
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18 Nov 2016
www.hemenparekh.in / blogs
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