There
are proposals to discontinue the income tax on individuals and HUF in
India by certain political parties. These proposals are welcome and
rational. This would be most beneficial to all the citizens of the
nation. Money is taxed in multiple means and in many instances.
These would reduce the tax burden of the citizens and bring about
major changes to the people, society and nation. Some of the benefits
foreseen are listed.
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1.00
Psychology and Physical : -
1.01
The citizens would lead a life of peace and tranquility, free from
the burden of compliance of income tax laws, exemptions, etc.,
without the fear of any violation even inadvertently.
1.02
The psychological relief would bring about
better health and wellness among the citizens.
1.03
No bribes to pay. No threats of wrong assessments, no penalties and
no litigation.
2.00
Savings & Banking :-
2.01
The citizens would put the money available with them , relentlessly
into safe means of savings like in bank deposits and other interest
earning bonds.
2.02
The decisions on the avenues to save are more open; and not directed
by various exemption schemes laid down by the Income tax act. The
decisions will be based on the individual needs and aspirations, than
otherwise dictated by the tax savings schemes of insurance, mutual
funds, equity schemes etc.
2.03
The savings will be directed into approved avenues of the RBI and not
into schemes claiming high rates of returns.
2.04
Large accumulation of deposits in banks and
other financial institutions will enable to bring about resurgence of
fresh deployment as investment in industry, infrastructure etc.
2.05
Transactions will be routed through banking channel, need for more
bank accounts, bank branches , banking network; resulting in hoarding
of cash and the money with the people be put to productive use.
3.00
Expenses :-
3.01
Statutory expenses arising out of fees , filing fees, fees to
auditor, advocates etc are avoided.
3.02
Depreciation claimed as an exemption ceases, resulting in avoiding
purchase of unnecessary equipment, car, etc just to avail the
exemption and the purchases are made more on the needs. The value of
the purchase are also made need based. This could lead to lesser
number of cars on the road, drop in value of cars in case of
purchase by individuals.
4.00
Foreign exchange and Rupee value :-
4.01
Disincentive to money laundering - There will be no incentive to
siphon out the money to foreign lands / bank accounts outside India.
The money can as well be retained in India legally and secure without
fear . This will arrest the flight of money through illegal routes
like hawala, under invoicing of exports, over invoicing of imports,
trans border transactions merely for the purpose of money laundering.
4.02
Rupee value appreciation - The demand for forex will drop , resulting
in Rupee value appreciation. The rupee value would appreciate between
10% to 30 % in a year of announcing the discontinuing of income tax
on individuals and HUF.
4.03
Flight of forex to India – There will be large transfer of forex to
India , resulting in huge build up of forex at low cost.
4.04
Decrease in cost of essential imports - The essential imports like
petroleum etc would cost less , resulting in the lowering of retail
prices of petrol, diesel, LPG ; directly influencing the economy by
lowering the cost of transport, resulting in arrest of inflation and
stimulate real growth in the economy.
5.00
Nation stands to gain :-
5.01
The unproductive and wasteful expenditure incurred by the govt in
realising the income tax is eliminated. The
cost of revenue realisation in case of
income tax is very high and disproportionate compared to the other
revenue streams.
5.02
The Income tax establishment may be moved to other revenue
departments .
5.03
No filing work, no need to engage return filers, auditors, advocates
for various litigation with the tribunals and courts; resulting in
elimination of unproductive work in the department side as well.
5.04
No black economy , Only one economy.
5.05
All round drop in prices, cost of labour,
increase in productivity and efficiency; reduced cost of food,
transport, travel bring about spiralling
drop in the expense levels of the citizens.
5.06
Overall consolidation of our economy, bringing about competitiveness
in our export front and discourage imports of non essentials.
5.07
Better revenue realisation in other means
due to better compliance.
6.00
Real Estate & Gold :-
6.01
Property prices are appreciating mainly on account of depreciating
rupee , easy availability of home loans, deductions for interest
paid , deductions on repayment etc. The property prices would slide
and stabilise to a realistic level,
bringing in more people requiring homes within easy reach .
6.02
Multiple property purchase as an investment avenue will be eliminated
due to the slide in the property prices.
6.03
Construction costs would fall; practices and management would become
more productive and efficient. Profits from operations and not from
speculation.
6.04
Increased revenue collection from stamp duty , registration due to
realistic declaration in documents.
6.05
Drop in gold prices, off take. No incentive to buy and hoard gold.
Gold turns into a negative yield asset. Gold retains its only
advantage of instant liquidity.
