Research
Paper By : CA A. K. Jain
(Outlined System herein below is The
Solution for the Economic Revival of India)
A few years
back, when the world was looking at us with high expectation of growth and
stability, the apathetic fiscal management severely dented the Indian economic system.
The erstwhile Indian Government failed to appreciate the ground rules and
requirements of a growing Indian economy. When Indian corporate was looking at
world map for their next destination, some over-enthusiastic Economists did
everything possible to rattle the aspiration, ambition and dignity of the
entrepreneurs and their enterprise. Why did they do it? This is a question for
everyone.
Anyway, that is
past. India
Although, Mr.
Modi has the best of the technology and talent around him to coordinate his
plans and proposal, with all the humbleness, I would like to mention some
suggestive ideas for the desired upgradation of Indian Fiscal System.
It is
foremost important that the fiscal system should not be draconian, excruciating
and compelling. It should be appeasable and amenable. Present Indian fiscal
system is not only perplexing but also mystifying for a common person. In existing format, Government is collecting
revenue through multiple and multilevel tax legislation. The basic concept of Indian
tax laws is centuries old and had its origin somewhere in Egypt
Although,
hard to believe but, it is practically possible to write entire Taxation Law in
simple English and in just few pages (at the most 75 pages). The scheme
mentioned herein below is extremely simple and manageable without the fleet of tax
collecting agencies and officers. In fact this scheme will increase the quantum
of revenue collection by manifolds without bullying and coercive procedures. I
will call it, “Consolidated Revenue Act of India”.
The Consolidated Revenue Act can be
drafted on the followings lines.
1. Consolidation
of Old Revenue Acts - Income
Tax, Wealth Tax, Service Tax, Security Transaction Tax, Dividend Distribution
Tax, Excise, and Customs Acts etc. can be consolidated under one single Consolidated
Act.
2. Chapters
– The proposed act, will
consist of chapters such as Direct Tax (Income), Central Excise
(Production), Custom (Imports), Service Tax (Services ) and one chapter of Common
Provisions applicable to all other chapters.
3. The
Salient Features –
3 B 1. The
goods for Excise and Custom Duty should be classified under only four heads
instead of several hundred heads presently. Central Classification authority
should be appointed.
- Essential for Life –
No Duty
- General items –
8% Duty
- Luxury Items –
15% Duty
- Super Luxury Items – 100%
3 B 2 Service
Tax should at 8% of the gross value of services rendered where annual value of total services rendered is in excess of 50,
00,000/-. No exceptions & no exemptions, no classifications. CENVAT credit should
be allowed.
3 B 3 Provisions
regarding assessment, interest, appeal, etc. can be common and same as
applicable to direct taxes.
3 B 4 All
other taxes to be withdrawn. VAT to be operated at State level. CST to be
withdrawn.
http://www.youtube.com/watch?v=v-jQnv8rL2w
4. Authority of Advance Ruling - One single authority will be setup to issue clarifications through emails to tax payers and tax collectors. All clarifications will be provided in three working days and shall be subject to payment of Rs. 5000/- . The authority will consist of multiple members representing ICAI, Finance Ministry, Reserve Bank, Supreme Court etc.
4. Authority of Advance Ruling - One single authority will be setup to issue clarifications through emails to tax payers and tax collectors. All clarifications will be provided in three working days and shall be subject to payment of Rs. 5000/- . The authority will consist of multiple members representing ICAI, Finance Ministry, Reserve Bank, Supreme Court etc.
5. Old
Assets Declaration Scheme - Indian infrastructure development projects need gigantic
funds which can neither be generated through tax collections or borrowings. It
is a well known secret that, Indian economy has a parallel economy flooded with
enormous wealth generated through dubious means and methods. In past the
governments made attempts to legalise these funds but not even a fraction of
the total amount could be realized. Through this single source of funding,
enormous financial resources can be raised for all the financial and
infrastructural needs of the country.
The
Government should offer a Scheme for introduction of capital in specific
sectors. The scheme unlike past should be open for a longer period of time, may
be 3 to 5 years. Larger duration of the scheme will help the entrepreneurs in
planning and execution of projects. The scheme may provide total immunity from
penalties and prosecution if the declarant pays a tax of 12.5% and declared
assets are invested for the development of Infrastructure e.g. Education,
Health Services, power generation, transport, communication, rural development
and Family Planning etc. This will also facilitate the transfer of Indian funds
parked outside the country. The scheme should be unconditionally apply to all
irrespective of their caste, class and creed. Although, proposing these schemes
again and again is painful, but in the overall interest, we have to make
certain compromises and sacrifices with the policies in the overall interest of
the country. If we want development faster than China
Andaman &
Nicobar and many other Indian Islands Hongkong , Mauritius Malta
7. Export
of Arms and Defense Material
This is most
profitable business in whole of the world. All developed countries technically survive
for substantial revenue on this industry. Besides, the industry gives
international political maneuvering capabilities. This industry should be
encouraged, supported and subsidised through
private sector participation. Since,
this subject is directly connected with the economical development of the
country, it is placed here.
http://www.youtube.com/watch?v=v-jQnv8rL2w
9. General
Provisions.
9. B.
Individual loan defaulters and all directors of defaulting companies should be
blacklisted and their names be published on 1st January every year in the national
newspapers and remain on the government websites even after their death.
Passport of all such persons should be confiscated. No further loans to be
granted. Action under any other law also possible. Withdrawal of voting right
etc.
9
C Special status should be given to all citizens who have achieved
exceptional success in their business or profession. The criteria of selection
could be : Chairman of the company employing more than 10,000 persons, Capital
employment of more than 5,000 cr., Corporate Income Tax contribution of more
than 500 cr., Corporate Excise Duty / Customs payment of more than 500 cr., Individual
Tax contribution of more than 50 cr., Corporate Exporting more than 5,000 cr., Corporate
Imports more than 10,000 cr., Turnover more than 50,000 cr.,
Special
Status may mean privileges like: Business award by the President, Diplomatic
Status for the Chairman of such corporate, Free Personal Security by Government,
Central Cabinet Member Status, Blue Light Vehicle, Etc.
The system
proposed herein above offers total transparency. A small number of
taxman will be able to generate more than ten times revenue in an efficient
manner without any kind of policing, coercion, compulsion.
In this
context, Baba Ramdev has also presented some ideas. According to him 2% banking
transaction tax can be adopted to replace existing taxes. But, a
deep study leads to chaotic situation for the economy as a whole. In fact, the
proposed system of Baba Ramdev has already been tested by some
countries in past without much success.
I suggest to our
most respected PM and his Governing Body to accept these proposals in the
interest of every common person.
For doubts, discussion and detailed presentation - please do not hesitate to call me on my cell no. 98-100-46108.
