Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.

There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Thursday, 17 November 2016

Having the Cake and Eating Too ?


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 !

-----------------------------------------------------------------------------------------------------

18  Nov  2016

www.hemenparekh.in / blogs



   





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