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Replace ‘Income Tax’ with ‘Expenditure Tax’with certain conditions

This petition had 112 supporters


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I have sent a petition to Dr. Raghuram Rajan, Governor, Reserve Bank of India for adding 3 new bank accounts in the list and modifying Savings Bank Account to “Zero balance account” instead of newly introduced “Basic Bank Account” The new accounts are for people whose income is not regular and constant. It can be found in details here: http://www.change.org/en-IN/petitions/new-bank-accounts-for-convenience-of-indians?share_id=VtjGUPhDHg&utm_campaign=petition_invitation&utm_medium=email&utm_source=share_petition . If Reserve bank approves this proposal then it can be made effective with replacement of ‘Income Tax’ with ‘Expenditure Tax’ and adding some clauses as detailed in petition.

This will help people to avoid concealing their income, stop tax evasion and generation of black money.

 

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Direct Tax:

I have sent a petition to Dr. Raghuram Rajan, Governor, Reserve Bank of India for adding 3 new bank accounts in the list and modifying 1 account namely Savings Bank Account. This should be made “Zero balance account” instead of newly introduced “Basic Bank Account” The new accounts are for people whose income is not regular and constant. Such people try to hide their income which leads to tax evasion and generation of black money. It can be found in details here: http://www.change.org/en-IN/petitions/new-bank-accounts-for-convenience-of-indians?share_id=VtjGUPhDHg&utm_campaign=petition_invitation&utm_medium=email&utm_source=share_petition . If Reserve bank approves this proposal then it can be made effective with following:-

1.            ‘Income Tax’ be replaced with ‘Expenditure Tax’

2.            A secure and reliable method of money transfer be evolved.

3.            Printing of ‘High Value Currency Notes’ be stopped forthwith.

4.            Sale of gold by temples/mosques/churches and alike.

5.            Define Savings for purpose of income tax.

My demand is explained in details as under:

Expenditure Tax: There should be no limit on earning of money (or goods) by any Indian. More earning would improve condition of people. However, expenditure of people should be limited so that every individual feels equal to other. Next case is there are some Indians who earn money during a limited life span and have to survive after money earning becomes impossible. A person in show business is an example. They earn very high amount during their hay days and spend during rest of the life. Due to heavy income tax, they try to hide actual earnings. They invest such earnings in such a way that it would not come to light under any circumstances. Hiding of income leads to generation of black money. Investment in a particular field increases prices in that field. Land prices are multiplying not only because land is scarce but also because it is considered safe investment. Those who wish to lead happy life even after their regular income source dries can earn later in their life by selling land as and when needed. To avoid such market trends, the government should offer a safe and reliable investment method. That could be a ‘Special Providend Fund (SPF)’ with no limits for tax free investment and moderate interest say equal to Saving Bank Account interest rate. Investment in such an account must be considered as ‘Saving’. Rule should be “levy no tax on investment in this account and charge tax when money is withdrawn from this account. The government must study and define income, tax free expenditure and savings. Example would be Sale from manufactured product would be income. The government must estimate minimum need for survival for an individual and family. This shall be tax free expenditure. Investment to expand production or increase strength of employees shall go in the list of savings. Thus the government should make 2 lists one for income and another for savings and also estimate minimum expenditure for survival of a family and a single individual. From these three amounts, taxable liability of an individual or family should be estimated as follows. Income – tax free expenditure – Savings shall be the taxable amount. This tax is on expenditure meaning those who spend more pay more tax. Hence, Expenditure Tax should be levied rather than Income Tax.

Secured and Reliable Method of Money Transfer:  Presently cash transfer is considered as the most reliable method. However, it helps in corruption. As far as possible all money transactions should be through banks. Debit and Credit cards can be used for such transactions. In order to stabilise Indian economy people should be discouraged from spending from future income except for a few needs like housing, education, illness, farming and alike. The government in consultation with banks should derive a procedure for quick approval and disbursement of funds for individual needs. For regular transactions between people and goods sellers there should be double checking procedure of payment. When such a procedure is followed the money should be transferred in the seller’s account only i.e. money transfer from any customer (or payer) shall be in the account of the person holding the transfer machine. This will need a specifically programmed money transfer machine, from a payer to a specific payee (payee who owns that machine). There should be specific cheques which have double signature and/or thumb impression. The transaction should work as follows. Payer hands over cheque to payee. Payee writes amount and his name on the cheque. Payer checks this and puts first signature and/or thumb impression and gives back the cheque to payee. Payee puts cheque in machine. Machine checks availability of money and authorises transaction (This means the amount is earmarked for this transaction). Payer takes back cheque and second time signs and/or places thumb impression on cheque. The cheque is second time fed to machine to complete transaction. This way money transfer shall be as good as cash transfer and it shall be deposited only in payee’s account. I understand such a machine has been invented in USA.

Printing of ‘High Value Currency Notes’: High value currency notes shall not be required when cash transfer is secure and reliable. Printing of such notes can easily be avoided. People still may need cash for minor transactions say up to Rs. 200.00 or below. Such transactions would need currency notes of denomination say Rs. 50, Rs. 25, Rs. 20, Rs. 10 and coins. The government should concentrate on low denomination notes and coins. Next task would be withdrawing currency notes in circulation. This can be achieved by making effective use of banks. Those who possess currency notes of denomination Rs. 100 and above should place their signature on each of the notes and deposit the amount in respective bank account. Bank should check signature on each of the notes and accept currency notes but shall not credit amount immediately in bank account. Bank shall check each and every currency note and validate. If fake currency note is found the bank should charge the person for the same and matter shall be decided by the district court. This method would avoid deposits of fake notes. Credit in bank account shall be completed within a given time period say one week.

Sale of gold by temples/mosques/churches and alike: - Many places of worship are holding a large quantity of gold, silver, diamonds etc. This is not only a security hazard but also locks huge resources useful for production. Other aspect is the government imports huge quantity of gold from other countries. Imports result in devaluation of Indian currency. The government should give concession to temples etc. in payment of income from sale of gold provided this money is used for establishment of quality universities in India. In other words sale of gold should be considered as income and expenditure on University should be considered as savings. This should be organised in such way that quality type universities are established. Other possibilities of making this wealth useful for nation may be adopted. The government should take responsibility to keep this wealth safe and make nominal payment to temple etc. from where the wealth is received.

Savings: - The government shouldinclude such items ofexpenditure in this list which help in increasing employment, training, education, health and infrastructure. Amount may be connected directly to the benefit expected. Example can be a particular sum of money invested per person employed in addition to earlier strength of the establishment. Sale of land, articles etc. meaning all transactions which brings in money shall be considered as income. Similarly all transactions which result in paying money for creating assets or increasing employment shall be considered as savings. The government must make elaborate lists for both expenditure and savings. Income tax department must follow list only.



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