Saturday, November 12, 2016

DEMONETIZATION (WITHDRAWAL OF 500 & 1000 Currency notes as Legal tender)

To set the context, I would like to state that I am not against fact, I am for Demonetization but in very bigger way...   1. Announcement of JANDHAN yojna was to my delight as it is the first step in combating corruption.   2. Announcement of electronic payment receipts (EPR )for government departments as a part of DIGITAL INDIA has enhanced my spirit in journey towards corruption free country... 3. Passing of GST bill helped me believe that radical change is right around the we all know as to how GSTN executes this marvellous legislation.   4. Discussion of payment bank concept enhanced my enthusiasm....   5. Introduction of Unified Payment Interface (UPI) is another brilliant move providing identity of person sending and receiving money.   When our PM announced that new 500 and 2000 notes will be issued I was extremely disappointed... because combating corruption in India is IMPOSSIBLE with PAPER CURRENCY IN CIRCULATION   Reason 1 THIS IS NOT VACCINATION AGAINST DISEASE OF CORRUPTION (just an Anti biotic) The very fact that issuing new currency notes is ONE TIME MEASURE to clear existing black cannot stop black money creeping again... Example: traffic police will now take 2000 as bribe...for an offence ...   Reason 2 NUMEROUS WAYS OF COMPROMISING OBJECTIVE STILL EXIST This is because of the very fact that paper currency exists.   Very minute portion of innumerable ways of compromising objective are   1.Exchange of 500&1000 for 100 rupee notes was one of initial knee jerk reaction to the announcement...   2.Purchasing Gold and stacking it was another mode adopted to change form of black money...of course this will at least contribute 30% tax...if not penalties...   3.Using accounts of others and withdraw new notes....   In my view, Demonetization preceeded ONE CRUCIAL STEP....just one...     AVAILABILITY OF CYBER INFRASTRUCTURE to traders or service providers...   This includes   1. Availability of Branches of Bank/business correspondent in every village/town/city.   2. Incorporating world class cyber security throughout payment systems across india.   3. Introducing Digital Lockers wherein account holder details are mapped   4. Availability of POINT OF SALE terminals/E WALLETS to all traders/ service providers starting from farmers, hawkers, peddlers to everyone.   And for all those who believe it is impossible to materialize even in a decade here are few statistics ....There are around 120 crore population in approximately 25 crore households spread over 650000 villages/towns/cities.   1. As of 2nd November 2016,under jan dhan yojna 26 crore accounts have been opened and around 20 crore rupay cards issued...this number can be increased to provide card for all...and is already in progress...   2. Strengthening existing security systems can be done by conducting international conferences/seminars/idea contests etc. including all software engineers either employed or unemployed in India and also across the globe.   3. Including manufacturing of POS terminals and providing e wallet services under MAKE IN INDIA initiative to attract FDI as much as necessary thereby reducing unemployment atleast to some extent.   I would like to conclude that, had the announcement been made after an year or two and it did not include reissuing paper currency, it would have been the wolrd's most successful win in the battle over corruption. Thank you for reading...I am available at Please do communicate your views.. JAI HIND

Wednesday, March 16, 2016

Gibes & Special interest Tax (GST) BILL

No matter what, GST Bill which is struggling to roll out is undoubtedly a good peace of legislation.

Every one who has gone through GST Bill has their own reservations. Its not wrong to have reservations. But one should have a solution that is implementable irrespective of time frame. A solution that is free from bias, free from political interests, free from scope for manipulation.

Three most debatable reservations are 1. Ceiling on GST Rate in Constitution 2. Abolishing proposed entry tax 1% which was proposed for maximum of 2 years from implementation 3. A satisfactory dispute resolution mechanism

2 and 3 are good ones which definitely can be considered as they enable GST for achieving its purpose of eliminating Cascading effect and better dispute resolution mechanism.
Leave aside 2 and 3,  as they were already being considered by Government.

 Ceiling on GST rate in Constitution. Lets have a look at this.

Capping the GST Rate is not a bad idea. But the condition that GST Rate should be capped in Constitution is irrational, insane.

Article 246 of the Indian Constitution, distributes legislative powers including taxation, between the Parliament of India and the State Legislature. Schedule VII enumerates these subject matters with the use of three lists:
  • List - I entailing the areas on which only the parliament is competent to make laws,
  • List - II entailing the areas on which only the state legislature can make laws, and
  • List - III listing the areas on which both the Parliament and the State Legislature can make laws upon concurrently.
Separate heads of taxation are no head of taxation in the Concurrent List (Union and the States have no concurrent power of taxation). The list of thirteen Union heads of taxation and the list of nineteen State heads are given below:

Central government of India

S. No.Parliament of India
1Taxes on income other than agricultural income (List I(Union List), Entry 82)
2Duties of customs including export duties (List I(Union List), Entry 83)
3Duties of excise on tobacco and other goods manufactured or produced in India except (i) alcoholic liquor for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in (ii). (List I(Union List), Entry 84)
4Corporation Tax (List I(Union List), Entry 85)
5Taxes on capital value of assets, exclusive of agricultural land, of individuals and companies, taxes on capital of companies (List I(Union List), Entry 86)
6Estate duty in respect of property other than agricultural land (List I(Union List), Entry 87)
7Duties in respect of succession to property other than agricultural land (List I(Union List), Entry 88)
8Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freight (List I(Union List), Entry 89)
9Taxes other than stamp duties on transactions in stock exchanges and futures markets
10Taxes on the sale or purchase of newspapers and on advertisements published therein
11Taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce
12Taxes on the consignment of goods in the course of inter-State trade or commerce
13All residuary types of taxes not listed in any of the three lists of Seventh Schedule of Indian Constitution

State governments

S. No.State Legislate
1Land revenue, including the assessment and collection of revenue, the maintenance of land records, survey for revenue purposes and records of rights, and alienation of revenues (List II, Entry 45)
2Taxes on agricultural income (List II, Entry 46)
3Duties in respect of succession to agricultural land (List II, Entry 47)
4Estate Duty in respect of agricultural land (List II, Entry 48)
5Taxes on lands and buildings (List II, Entry 49)
6Taxes on mineral rights (List II, Entry 50)
7Duties of excise for following goods manufactured or produced within the State (i) alcoholic liquors for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics (List II, Entry 51)
8Taxes on entry of goods into a local area for consumption, use or sale therein (see Value added tax) (List II, Entry 52)
9Taxes on the consumption or sale of electricity (List II, Entry 53)
10Taxes on the sale or purchase of goods other than newspapers (List II, Entry 54)
11Taxes on advertisements other than advertisements published in newspapers and advertisements broadcast by radio or television (List II, Entry 55)
12Taxes on goods and passengers carried by roads or on inland waterways (List II, Entry 56)
13Taxes on vehicles suitable for use on roads (List II, Entry 57)
14Taxes on animals and boats (List II, Entry 58)
15Tolls (List II, Entry 59)
16Taxes on profession, trades, callings and employments (List II, Entry 60)
17Capitation taxes (List II, Entry 61)
18Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling (List II, Entry 62)
19Stamp duty (List II, Entry 63)
Any tax levied by the government which is not backed by law or is beyond the powers of the legislating authority may be struck down as unconstitutional.

More details about various heads of taxes can be known in the following link

Out of ALL ENTRIES RELATING TO TAXES in Seventh Schedule of Constitution of India whether it is UNION List ot STATE List, only 1 TAX has got ceiling mentioned in Constitution of India - TAX ON PROFESSIONS, TRADE, CALLINGS & EMPLOYMENT has ceiling of Rs. 2500/- per annum from any person. (increased from Rs.250/- vide constitutional amendment)

As a matter of Administrative Ease, it has been avoided.
Also as a matter of TRUST on the DEMOCRATIC principles enunciated in our Constitution which enables people to elect their representatives whom they believe to act in best interest of general public.

Our beloved craftsmen of Constitution could have easily capped every entry relating to taxation with either specific or advalorem rate. But that was not so. They knew that scenario across the Globe can always impact INDIA either Positively or Negatively which requires immediate action by Union Government.

An Action which cannot be delayed for the want of CONSENSUS of all states. An action which is beneficial to Public at Large.

CONSTITUTION OF INDIA is Supreme legislation. It is principle based document. It outlines the rationale behind governance.

The Constitution declares India a sovereignsocialistsecular,[7] democratic republic, assuring its citizens of justiceequality, andliberty, and endeavors to promote fraternity among them

NOT a SCHEDULE IN INCOME TAX which specifies tax rates.

In the conclusion of his Making of India's Constitution, Justice Khanna writes:
"If the Indian constitution is our heritage bequeathed to us by our founding fathers, no less are we, the people of India, the trustees and custodians of the values which pulsate within its provisions! A constitution is not a parchment of paper, it is a way of life and has to be lived up to. Eternal vigilance is the price of liberty and in the final analysis, its only keepers are the people."[64

I SINCERELY REQUEST all the law makers
NOT TO CONFUTE just for the sake of argument.
NOT TO BE SKEPTIC just because you have to
NOT TO BE CYNICAL just because someone changed their stance on it over period of time

I take my time out to publish this, just because I believed that as a responsible Citizen of India
-- Its my DUTY TO BRING IT TO knowledge of AAM AADMI apart from right to express my view conferred by our constitution