The author is not an Exemplary theoretical Economist & only a normal citizen of Practical Approach in day to day normal life
Present & past governments of both State & Centre were making hue & cry about eradication of Corruption & Black Money & Kala Bazaar, alleviation of poverty etc
From the Day of Independence to till date , has the Government tried to Analyze the Reasons for apportioning certain amount as an unaccounted one ? The Government / CBDT & RBI should have convened a meeting at Centre to analyze the reasons for emergence of Black Money. Really all such monies called & designated as black money are not really black. They are made to be black by the draconian tax laws of Governments at Centre / CBDT/ RBI. The Government should not a money Making Agency by the Unworkable & Un implementable Tax Laws & schemes. It is accepted fact by one and all that any govt needs money for its day to day administration /for implementing People welfare schemes etc. No doubt about it. It should be achieved only be people friendly tax laws & Schemes and not by Draconian Laws
The Reasons are very simple & could have been solved during Fifties itself without allowing to get the present magnitude. The Unworkable Unimplementable TAX LAWS Of Our Country are the sole responsible for the generation of so called Black Money & Black Market & Havalas
The CBDT & Finance ministry Should have applied their minds to Modify the Tax Laws in such a way all the Citizens irrespective of status to come into the Income tax net on their own free will & volition.
For instance the present law says 30% of Net Profit of a business organization is to be cleared as IT. The Business organization which earned reasonable profit by genuine means & with great hardships will definitely think that the 30% Income tax is really beyond the imagination of a business house. Hence he seeks the help of an Auditor who could bend the laws to the convenience of his client & arrives at a lower rate of Net Profit. The Difference between the original straight forward account & the manipulated account is so called BLACK. THE TAX LAW is RESPONSIBLE for such an act of suppression of real income.
Now it is suggested at least the present Govt at Centre to think of the following Remove the different slabs of Income tax rates
Remove all Exemptions right from LIC to Government general relied funds
Exemptions must be considered 100% only to Defense personals of the three wings & to none others. Even state Police Force should not be considered for Exemptions
There shall be a flat Rate of 5 or 10% to all sections of Business houses irrespective of its status ( Say from small provision stores to a Big Business house) All the citizens will definitely on their own free will file the Tax Return without hiding any money. Tax Law can be amended in such a way that tax payers may be allowed to E file the return Every month as is being done for the Sales Tax. Any Tax amount due may be remitted on line in the respective head of the IT Dept.
There Ends the Matter.
As per the present statistics only around 4 to 5% of the Population are paying Income tax
The CBDT/ Finance Ministry/RBI should have thought of this long before & should have boldly come forward for the people friendly TAX Structure . Had the Stringent & unworkable draconian TAX laws been repealed during fifties itself , the present situation of Demonetization of High Value currencies would not have arisen. Terrorism would not have crept in. The Present tax structure alone is Fully Responsible for Terrorism & other Atrocities for which the Central Govt alone is responsible & accountable. All the financial budgets were presented in the parliament were full of Jugglery of words & figures & most of the terms used by the so called
veteran Economists could not be understood by ordinary Citizen. Even most of the Mps could not have understood the full in depth meaning of the budgets & simply would have nodded their heads since they are MPs
The Following simple example will show how the Exchequer would have been full to brim
For instance total Population at Place A is 50000
Let us Assume (as-per present situation) 5% of the population are Income Tax Payers (2500)
The earnings of the 2500 persons may be taken as 50000 per month /head say 6 lakhs per year
The Standard Deduction is Rs 1,50,000
Balance amount to be taxed at 30% 4,50,000 x 0.3 =Rs 1,35,000
Whereas if the Govt decides to repeal all the Exemptions & announce a flat rate tax of 5% as per the following calculations
Total Population 50000
20% of the population are non taxable 10000
Balance 80% are Taxable 40000
Average Income per head say Rs: 50000 per month & No Standard Deductions allowed
For Rs: 50000 @ 5% Tax per month Rs: 2500 x 12 months = 30000 x 40000 population 1200000000 ( One Hundred twenty Crores)
In the Earlier Case Rs: 135000 x 2500 = Rs: 33,75,00000( Rs:Thirty Three Crores & Seventy Five Lakhs Only)
The above is a simple Arithmetic & there is no words of Financial Jugglery
Since all the earning section of the society will be glad to remit the tax at the revised rate of 5% the question of Black money or Hoarding of Money Or Concealment of Income etc will automatically be wiped off. Terrorism will not creep in the minds of the people.
Taking advantage of the present Draconian Tax Structure Laws of India , the foreign countries take advantage of drawing the attention of our people by attracting with fake currencies & other nefarious means indulge in terrorism .The reasons for terrorism are (1) For Grabbing our Natural Resources(2) Stealing of our Technological Know Hows((3) Grabbing of Defense Secrets
All the above can be achieved by Attracting with pumping with illegal Money.
If the Tax Structure is Simple and people friendly, definitely the Foreign Investments will come in automatically. Similarly the Local Cottage/ Minor/ Small scale Industries will thrive & there will not be any botheration for Govt to Solve Unemployment Issues .Poverty will automatically be alleviated . It is also the duty of the both State & center to pull up their socks & see that all cultivable lands are not sold for the creation of Concrete Jungles.
Maximum Importance to be Given for the Agricultural Development throughout the Country by saving the Agriculturists from the Perennial Water Problems either by way of Monsoon failure or the Neighboring states adamant mentality of non sharing of the river waters. Every Govt Says Agriculture & Farmers are the Back Bone of the Nation. But the Back bone & spinal cords are broken by all the successive governments by not taking concrete steps in the direction of river water sharing.
In a nut shell
Tax Structure must & should be Modified as per the said Suggestions
Instead of laying more Importance for computerization & Soft Ware Developments , more Stress & Importance to be given for Agricultural Developments . The Computer Technology Or Digital Technology May be applied to the viable extent towards Agricultural Development & Saving of Water bodies like Rivers/Lakes Etc.
The countries development lies only on the preservation of natural Resources / Agriculture & not just Building Concrete Jungles housing lot of Software Industries. Even Soft Ware Engineers have to eat only the Agricultural Products & not Electronic Chips
Another important suggestion is: when Centre or State Govt tries to implement a scheme , all about such a scheme should be well transparent & the ordinary Public opinions should be called for. The public opinion can be collected easily by the district collectors by issuing a prescribed format through print medias only as maximum percentage of public are still not aware of the electronic medias like computer net e mail etc. While Issuing such a format, there should be an elaborate details about the proposed schemes. The elaboration both Plus & Minus factors of the Scheme