The Arthakranti proposal
I think we professional esp CA's and Other finance professional need to look at this and discuss
Lets have a discussion here on this
Had a look at the proposals mentioned in that site.
The proposals are:
Complete withdrawls of current taxation laws except imports.
Our current tax laws are not competent enough, yes they are not. To take a VAT registration in Karntaka (I Practice in Karntaka), you have toil a lot.
Inspection, Inspectors-these words make you feel if you are still leaving in Jamidaari system. Common world has advanced and so the level of fraud.
Finance criminals have raised their levels but not the law makers or officers administrating these laws.
Yes we need a complete reform. GST will solve this?
Mostly yes, laws controlled from center are doing well take MCA.
Tax on Banking Transactions
This is another proposal, I do not support it and I have reason for it. How can we think of taxing every single transaction.
We are not a sophisticated country, already volume of cash transaction is very high. Taxing banking transaction will encourage cash transactions.
E-Commerce, they will prefer COD (Cash on Delivery) instead of online payments. Baba Ramdev came out with this proposal, he sales only in cash.
Cash trasaction will not attract any tax is another proposal, can we enough check points to stop cash transactions?
Making a transaction illegal above 2000 is another impossible task. To save tax, people will use only cash and do not believe that if any fraud people will even report it.
I do not think we are yet so advanced, except 5% population most of them are not tech savy and people will prefer cash transactions only for coming few more years, unless there is complete change in our education system at root level to educate people about how economy works.
My Opinion on current taxation system and what needs to be changed
Current tax system is neither good nor bad. But it is not even effective. I am a strong supporter of Indirect taxes but not Direct taxes.
Direct tax should not find a place in a capitalist country and undoubtly the entire world has accepted capitalist economy over the socialistic approach.
Specific to India, disadvatages of Direct taxes has resutled into:
- Creation of Black money, this money never flows into main economic cycle.
- High investment costs, have you heard of giving the file? Well that is additional cost attached to any investment. People are afraid to invest in anything, they have money but do not invest fearing a heavy income tax.
- Crime, yes since people have lot of black money. Believe me they have, are targeted by mafias. Applies mostly to Real Estate.
- GDP numbers are not accurate, though directly it is nothing to do with tax. More we collect tax, GDP indirectly improves. But if the money which is never disclosed comes back in economy escaping tax, the GDP will increase by a big margin. Foreign investors will love that, purchasing power will increase.
Indirect taxes should be encouraged instead of direct taxes, it is far more easy to collect indirect taxes and can be collected from everyone. GST is good step, hope soon through GST revenue of government will increase and complete withdrawl of Income tax may be considered, wealth tax is already abolished.
Your vies on it?