Blog

Tuesday, 2 May 2017

Same Wavelength ?

Hindustan Times ( 02 May 2017 ) carries following news report :

“ Recycle waste , save Rs 1,854 crore “

· When you don’t recycle waste, you cost the state Rs1,854 crore a year.

· The government spends Rs 905 crore a year just to collect waste from Mumbai homes and transport it to a dumping ground .

· At the Transform Maharashtra conclave on Monday, students from the Tata Institute of Social Science (TISS) showed just how costly the city’s waste issue is, and suggested giving citizens incentives to start recycling their waste at the source.

· The team of five students said incentives could include relaxation of property tax paid by households and restaurants, cheaper electricity bills and bio gas to households based on how much waste they segregate.

· Another solution they proposed was a machine that will eat up plastic and glass bottles and cans and dispense cash in return — an idea CM Devendra Fadnavis appreciated.

· These ‘Reverse Vending Machines’ will accept PET/glass/cans from users and return cash.

· To integrate waste pickers, the participants suggested a monetary award for workers who segregate the most waste . The team highlighted that they found policies were based on wrong perceptions: “As opposed to perception, urban areas generate more waste than slums.”

Congratulations , TISS students !

I am glad that , at age of 84 , I was able to “ sync “ with you , in my following blog :

Wednesday, 27 April 2016

Incentivize Housing Societies

· Disposal of garbage ( wet and dry ), is a big problem for all Municipalities

· In Mumbai , it is a daily 8,000 ton problem

· Despite a large fleet of garbage collection trucks and thousands of municipal employees ( including employees of contractors ), streets remain littered and garbage dumps keep overflowing ( when not burning ! )

· All kinds of solutions have been attempted in the past to solve this problem, without much success

· This is because current perception of the garbage generating households ( and of the office bearers of the housing societies ), is :

“ Garbage collection / disposal is Municipality's responsibility “

· This problem will persist till we succeed in changing this perception to :

" Garbage disposal is our responsibility "

· This change of attitude can be brought about by " incentivizing " the members of the Housing Societies

Here is how :

· The society where I live (Marol / Mumbai) has 200 Members ( flats )

· Each member pays monthly Municipal Tax of ( approx ) , Rs 600

· That translates to Rs 1.2 lakh per month ( Rs 14.4 lakh / year )

· In 5 years , Society pays to Municipality, Rs 72 lakhs

Govt / Municipality to make it compulsory for each big society ( size to be decided ), to install on its premises :

· Methane gas generating plant or Compost Fertilizer plant

o ( to take care of wet / organic garbage )

· Water recycling plant ( to filter and reuse water from shower / wash

o basin / kitchen sink for toilet flushing purpose )

· A Compacting Press for dry waste ( paper / bags / cartons etc )

Towards installation of such plants , Municipality to give a discount of 25 % to the Society in monthly taxes , for a period of 5 years

· That is a rebate of Rs 150 / month / flat for 5 years

· This would work out to a saving of Rs 18 lakh ( 25 % of Rs 72 lakh )

This amount should be sufficient for the Society to invest in these plants and for paying wages for persons needed to look after their operations

· I believe such a positive incentive will motivate most of the Societies to undertake to install such facilities

· As a negative incentive , Govt / Municipality should levy additional surcharge of 25 % on the monthly taxes ( ie raise to Rs 750 / month in our case ) to those societies which fail to implement this scheme within ONE YEAR of notification

· It is high time citizens are involved and motivated ( through negative as well as positive incentives ) in keeping their cities clean and its environment pleasant

Monday, 1 May 2017

Nightmare of GST ?

HINDUSTAN TIMES ( 01 May 2017 ) carries following news report :

“ You may have to fill 37 forms a year to be GST compliant “

GSTR

The tax returns under GST will be 37 in a year for a company; GSTR-1, GSTR-2 and GSTR-3—for each month, and one annual return. For a company with operations in 20 states, it means 740 annual returns.

The finance ministry officials said they are trying to further simplify the process so that small businesses are not overburdened with filing returns.

Experts point out the huge reporting requirement under GST that has be handled and understood by taxpayers, be it businessmen or professionals. This is in contrast to the half-yearly returns mandated under the present service tax regime.

TRACKING TRANSACTIONS:

A businessman registered under GST, will have to upload all sales and stock transfer details on the GSTN. Every transaction will also have to invoiced.

COMPLIANCE:

Those paying tax under GST, will have to make investments to ensure compliance. Taxpayers will have to raise invoices and bills in the correct format laid down by the GSTN. E-way bills will have to be generated for every stock movement. Debit and credit notes will also have to be maintained along with books of accounts in the approved format.

Can this nightmare be turned into a day-dream ?

It is not merely , a question of “ can “ !

It is a question of “ how ? “

By implementing my following blog ( earlier sent as email to NDA Ministers ) :

Wednesday, 7 December 2016

From UPI to UTI

Of late, UPI ( Unified Payment Interface ) is talk of the town

It is high time , we also start talking about UTI ( Unified Transaction Interface )

Without naming it as such , Income Tax Department has already started compiling and analyzing , high value sales / purchase transactions , to figure out instances of suspected tax evasions

IT recently sent out notices ( Emails ? ) to some 7 lakh parties involved in 14 lakh high value non-PAN transactions, asking them to furnish their PAN details

Under several laws / rules / regulations , IT requires various agencies / entities / individuals , to furnish a lot of information whenever money changes hands

Following are a few examples :

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Who must report ? : Banks / NBFC / Post offices

What ? : Time Deposits ( if totaling Rs 10 L or more in a year )

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Who must report ? : Companies / Mutual Funds

What ? : Purchase of shares / Mutual Fund units (if Rs 10 L or more in a year )

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Who must report ? : Professionals / Businessmen

What ? : Cash receipts exceeding Rs 2 L from any person for sale of

goods / services

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Who must report ? : Jewellers

What ? : TCS ( Tax collected at Source ) for sale of bullion exceeding Rs 2 L or

jewellery exceeding Rs 5 L in cash

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Who must report ? : Any Seller

What ? : Sale of any other Goods / Service exceeding Rs 2 L

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Who must report ? : Property Buyers

What ? : TDS ( Tax deducted at Source ) for purchase of property with a value

exceeding Rs 50 L ( to be reported before paying the seller )

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Who must report ? : Person making any payment

What ? : Lottery / Game winning prizes exceeding Rs 10,000

( to be reported before paying the winner )

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Who must report ? : Buyer

What ? : Quote PAN while buying / paying / depositing ,

* Property exceeding Rs 10 L

* One time payment at hotels / restaurants, exceeding Rs 25,000

* Depositing cash exceeding Rs 50,000 in a day with a bank

* Purchase of Foreign Currency exceeding Rs 50,000

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Who must report ? : Seller

What ? : Verify PAN and furnish a statement to IT department on

transactions

beyond a certain threshold

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Who must report ? : Banks / Mutual Funds / Companies / Registrars

What ? : Annual Information Report ( AIR ) on high value

transactions

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{ Source : Maulik Madhu / Business Line / 05 Dec / Government on Data Trail }

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Considering the effort involved in compiling / collating and analyzing such a massive data , coming in continuously from lakhs of sources , it was natural for the IT department to make use of computer based BIG DATA analytics , to narrow down those suspicious cases

In our goal to make India , a LESS CASH economy , UPI / AEPS ( Aadhar Enabled Payment System ) , was an important FIRST step

But UPI / AEPS , just does NOT cover those sale / purchase transactions which take place using Credit / Debit cards and private brand Mobile Wallets !

To ensure that these transactions too get into the database of the Income Tax department , I suggest following :

STEP # 2

All other PRIVATE brand Mobile Wallets ( Paytm / MobiQuick / ItzCash / FreeCharge etc ), must be integrated with UPI, so that the sale / purchase TRANSACTION DATA generated through use of such private mobile wallets too gets integrated into the COMMON database of the Income Tax department

STEP # 3

All Card-Swipe / PoS machines must be UPI / AEPS compliant, so that all sale / purchase TRANSACTION DATA generated through use of all CREDIT / DEBIT cards, too gets integrated into that COMMON database of IT Dept

STEP # 4

All sale / purchase transactions by all other Electronic Fund Transfer Network ( EFTN ), too must be also transmitted / deposited , into this COMMON DATABASE of TRANSACTIONS

IN NUT-SHELL :

All sale / purchase transactions of any kind ( goods or services ) , MUST all get into a COMMON / CENTRAL database , through introduction of a UTI ( Unified Transaction Interface )

UPI + UTI = " Less Cash " + " Less Evasion " + " Less Black "

I request Shri Arun Jaitley-ji to consider my suggestion

02 May 2017

www.hemenparekh.in / blogs

Sunday, 30 April 2017

Everything Else being Equal

WHAT ?

· Last week , Donald Trump reduced Corporate Income Tax from 35 % to 15 % for American companies

· Earlier , UK had announced reduction in Corporate Tax from 30 % to 20 % . Several EU countries are planning similar reductions

· Closer at home , in his last budget , Shri Arun Jaitleyji had reduced Corporate Tax from 30 % to 25 % , for companies with annual revenues of less than Rs 50 crore

· News reports say that the Finance Ministry is considering to extend this benefit to companies with revenues of less than Rs 500 crores , in the forthcoming budget

There is sufficient evidence to show that :

· Lower tax rates lead to better tax compliance and higher , overall tax collections

· Lower tax rates also result in expanding the tax-base ( of tax payers )

This phenomenon assumes significance in view of the following declaration by Shri Hasmukh Adhia , Union revenue Secretary , last Saturday :

“ Close to 9 lakh registered companies have not been filing annual returns with the Ministry of Corporate Affairs ( MCA ) and are a potential source of money laundering

Focus should be now on technology . There should be no need to call anybody a thief. The machine should itself catch the thieves “

WHY ?

· To attract investment ( both local as well as Foreign ) in Mfg / Services / Infrastructure ( by enabling companies to plough back increased profits )

· To generate jobs for millions of unemployed youth

· To prevent companies from going abroad to make more profits in countries where tax rates are lower

· To make companies globally competitive

· To increase share of international trade by increasing exports

WISHFUL THINKING ?

Not entirely !

But , by itself , lowering of Corporate tax is not a “ sufficient “ condition for achieving the five “ Objectives “ listed above

For sure , no company hires more number of people than it needs , just because it can now “ afford “ ( due to bigger profits ) !

If we are smarter than those other countries , we should link lower Corporate Tax liability with each “ ADDITIONAL UNIT OF NEW JOB CREATION “ , as explained in :

Incentivizing Employment ? ( 24 Aug 2016 )

{ https://myblogepage.blogspot.com/2016/08/incentivizing-employment.html }

By “ Globally Competitive “ , I suppose , Economists ( - and Politicians ? ), mean :

Creating a LOW COST ECONOMY

That is not going to happen just because of “ LOW CORPORATE TAX “ !

It will happen only when we implement measures to facilitate “ LOW INPUT COSTS “

Inputs of all kinds as explained in :

· SolarPower at Rs 1 per Kwh ? ( 29 Jan 2017 )

{ https://myblogepage.blogspot.com/2017/01/solar-power-at-rs-1-per-kwh.html }

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· OneUp on Donald Trump ? ( 16 Dec 2016 )

{ https://myblogepage.blogspot.com/2016/12/one-up-on-donald-trump.html }

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· Automationis Inescapable ( 30 Nov 2016 )

{ https://myblogepage.blogspot.com/2016/11/automation-is-inescapable.html }

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· Howto break the Vicious Circle ? ( 03 July 2016 )

{ https://myblogepage.blogspot.com/2016/07/how-to-break-vicious-circle.html }

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· Level Playing Field ? ( 11 June 2016 )

{ https://myblogepage.blogspot.com/2016/06/level-playing-field.html }

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· BackFactory of the World ? ( 09 Sept 2016 )

{ https://myblogepage.blogspot.com/2015/09/back-factory-of-world.html }

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· Create Wealth to Create Jobs ( 26 Feb 2014 )

{ https://myblogepage.blogspot.com/2014/02/create-wealth-to-create-jobs.html }

If there is a political will , India can beat the menace of “ Anti-Globalization / De-Globalization “ , by turning itself into a LOW COST ECONOMY

By itself , reducing Corporate Tax will not take us very far !

01 May 2017

www.hemenparekh.in / blogs