CBDT’s Report On Measures To Tackle Black Money In India & Abroad

The Ministry of Finance has released a comprehensive report issued by a Committee headed by the Chairman, CBDT, titled “Measures to Tackle Black Money in India and Abroad” (See also Fact Sheet on Black Money & Dept of Revenue’s Report on Black Money & White Paper On Black Money).


3 comments on “CBDT’s Report On Measures To Tackle Black Money In India & Abroad
  1. hemen parekh says:

    Create Wealth to Create Jobs

    Our current Personal Income Tax slabs are :

    > Up to Rs 2.0 Lakhs………………….. NIL
    > 2.1 Lakh – 5.0 Lakh……………….. 10 %
    > 5.1 Lakh – 10.0 Lakh………………. 20 %
    > More than Rs 10 lakh……………….. 30 %

    That means , the more you earn , the more tax you pay !

    How does this wrong tax regime hurt our economy ?

    This regime ,

    > Punishes honest people

    > Penalizes wealth creation

    > Encourages creation of ” Black Money ”

    > Provides incentive for tax evasion

    > Diverts resources into unproductive assts such as cash/gold/land etc

    > Stops people from working harder / smarter

    With this regime , people tend to ask :

    > Why should I work hard and earn more , if the more I earn the more I
    pay ?

    > Why not evade paying taxes by hiding real income ?

    > How will I ever be able to buy that 1 room flat costing Rs 50 lakhs ? I
    need Rs 20 lakhs by way of black money to buy it ! Where do I get that ?

    > For every rupee that the government collects from me as tax , only 15
    paise come back to me in the form of civic amenities .

    A few years back , the tax regime was worse !

    One ended up paying , by way of tax , Rs 0.93 from every rupee earned !

    And after heaping on the honest tax-payers , all such disincentives , how much does our government collect by way of taxes ?

    > Total Tax Receipts ……………………………….. Rs 12.4 Lakh Crores

    > Personal Income Tax contributes………………..Rs 2.47 Lakh Crores

    Is there a way to raise that Rs 2.47 lakh Crores to Rs 247 Lakh Crores ?

    Can we raise it by 100 FOLD ?

    I am not an Economist ( my advantage ! )

    So , here is my crazy suggestion

    ” Inverse ” the tax slabs as follows :

    > Up to Rs 2 lakhs………………… NIL
    > 2.1 – 5.0 lakhs…………………. 10 %
    > 5.1 – 10 lakhs………………….. 8 %
    > 10.1 – 20 lakhs…………………. 6 %
    > 20.1 – 50 lakhs………………… 5 %
    > 50.1 – 100 lakhs………………… 3 %
    > Above 100 lakhs…………………. 1 %

    What is likely to happen with such ” INVERSE TAXATION ” regime ?

    Following few things :

    > Total personal tax payer base will go up dramatically from current 4
    crores tax-payers

    > Total personal tax collection too , will rise dramatically

    > Today , only 1 % of 4 crores tax payers ( approx 4 lakhs ) , contribute
    nearly 63 % of personal tax revenue ( of Rs 2.47 lakh crores )

    This ratio will change to , may be , 20 % of tax payers !

    > with this ” INVERSE TAX REGIME ” , there will be no incentive to evade
    taxes and to generate ” BLACK MONEY ”

    The more you disclose as your income , the less you pay by way of taxes

    > For a change , we will learn to reward honesty / efficiency / productivity !
    No need to bribe those Income Tax officers !

    > Suddenly , lakhs of crores of BLACK MONEY , stashed away in bank
    lockers / gold / land – and , of course those Swiss bank accounts – will ,
    suddenly become ” WHITE MONEY ” !

    > There will be a huge surge in bank deposits ( – even with , the inevitable
    lower interest rates )

    > Banks will be awash with funds to finance businesses / infrastructure
    projects etc , encouraging entrepreneurs / self-employed to set up new
    businesses ( at 2 % interest rates of loans ) and generate millions of jobs

    > There will be a phenomenal rise in Capital Markets

    Now couple this ” INVERSE TAX REGIME ” , with the following ” TAX FREE ” investment schemes , by creating Special Purpose Vehicles ( SPV ) :

    > NaMo MEGA-CITY SPV

    To implement Narendra Modi’s ambitious project to build 100 smart cities,
    at an investment of Rs 70 lakh crores , in next 5 years

    This project alone will create 5 million new jobs , every year

    > RaGa MEGA – JOBS SPV

    To implement Rahul Gandhi’s equally ambitious project to provide jobs to
    50 million youth over the next 5 years , at an investment of Rs 50 lakh
    crores

    In my opinion , such ” INVERSE TAX REGIME ” , coupled with the above mentioned SPVs , will herald an ” ECONOMIC ECO – SYSTEM “, which,

    > will create jobs

    > shun tax evasion

    > reduce corruption

    > convert all BLACK MONEY into WHITE MONEY

    > channelize these WHITE MONEY into nation-building projects

    To complete this ECO SYSTEM , we need to think ” Out of the Box ” in the matter of Corporate Tax Regime , as well

    Current trend in industry , all over the world , is to

    > Add highly productive , very expensive machinery to ” Automate ” all
    manufacturing processes

    > Reduce manpower by increasing ” Capital / IT Intensity ”

    > Hire low skilled workers by transferring higher ” Skills ” to machinery

    > Outsource manufacturing to countries where manpower is cheap

    > Move out of ” Manufacturing ” and shift to ” Services ”

    India cannot swim against this World-wide Trend

    We must innovate, to not only survive but to grow in this scenario

    Here is my suggestion :

    Set in motion , ” INVERSION of JOB REDUCTION ” regime , under which ,

    ” The more jobs a company creates , the less Corporate Tax it pays ”

    Example :

    > Up to employment of 100 persons …………………………. 30 % tax
    > 101 – 500 persons……………………………………………. 25 %
    > 501 – 1000 persons …………………………………………… 20 %
    > 1001 – 5000 persons ………………………………………….. 15 %
    > 5001 – 10,000 persons …………………………………………. 10 %
    > Above 10,000 persons …………………………………………. 5 %

    Let us celebrate those who provide employment to large number of persons

    Let us celebrate BIGNESS

    Let us create hundreds of WORLD SIZE corporations and take on the World

    On top of this , provide additional tax – breaks ( discounts ? ) to corporate as follows :

    > Average Age of Employees at 30 years………………….. 1 %
    > Ave age at 25 years…………………………………………. 2 %
    > Ave age at 20 years …………………………………………. 3 %

    Of course , very strict and transparent rules will need to be framed to

    compute,

    > Number of Employees ( Permanent – not probationers / trainees )

    > Average Age ( as on 31 March of Tax year )……etc

    But , here is an important aspect of this ,

    ” Incentivize Job Creation ” Scheme

    Today’s labour laws make it extremely difficult – if not impossible – for employers to layoff / retrench workmen , if demand shrinks

    Hence , to take advantage of this Scheme , employers are unlikely to hire thousands of youth , if they cannot easily trim the workforce , to match the shrinking demand

    So , an important corollary of this Scheme is to modify our existing Labour Laws to facilitate layoff / retrenchment , when situation so demands , while protecting the interests of the workmen concerned

    And , last but not the least , permit each and every candidate – and the political parties as well – to spend ANY AMOUNT on election campaigns ,
    without any restrictions as also accept any amount of Corporate Donations
    by cheque

    I rest my case !

    * hemen parekh ( 27 Feb 2014 / Mumbai )

  2. gopal nathani says:

    i read this paper basically though. even though it held an agenda to draw measures to tackle black money it admits of total helplessness as it demands thousands of steps/measures and amendments and coordination among umpteen agencies before it can bring black money into the ‘G’ coffers. you can’t act on such paper as it does not promise tangible results, does not set any time lines, does not even set targets. in fact following even an inch would make the situation dwindle further. this paper admits of defeat of this section of the government. for instance it says lovely export ruling is a handicap so please do something about it. it says allow us to trace the source of source as some ruling prevents upon them. the cbdt wants more powers/teeth without a any tangible promise. how can all round permanent additional powers be given when the object is only to get black money into G coffers and not for causing more harrasment .

    the paper admits that there is no exact figure of black money. if that is the starting point then one would wonder where will the action begin or end. how can you acheive something without even setting a target?

    it is time that the ‘G’ form a committee under the Chairmanship of present CJI to draw a working draft for implementation rather than a paper for any deliberations/circulations. no more time be wasted on drawing papers like these as these are only like a mannequin. present CJI is a man who has the potential to give a solution to this problem at least for now. go for it.

  3. ram babu B.Com says:

    (I admit that I did not go through the above as I do not want to) But I am writing this. Recently the Fin.Min has declared unclaimed Deposits with Banks, Provident Fund Orgns. + . Now it should declare how many in Number and amount the refund amounts from the Income Tax Dept. are lying unclaimed. So if the money BLOCKED is released to the public ……

    Secondly the employees of the Income Tax Dept. + outsourcing staff( as they work as couriers) should be subjected to narco analysis test before releasing their Retirement benefits. IF this CAN BE implemented by using sovereign power generation of black money will be stopped overnight. This will do much good than talking of bringing the black money which can never be brought back.

    The intellectuals preparing this paper may be remembered for generations.

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