Why no Tax on #AnimalCruelty? #RegulatePetSales with #GST and Income #Taxes
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If Buying Happens, The Taxing Must Too | If you can't stop it, TAX it.
'With over four million dogs, the Indian pet care market is pegged at over USD 1.22 billion with an annual growth rate of over 35 per cent.' says a 2018 report. That is about INR 9300 crores. Yet hardly any taxes get paid. How has this been allowed to happen? Surely action is needed. We don't support commercial animal transactions on principle, but since it is legal , please enlighten us why isn't the market paying taxes?
GST Implication : Did you know there is no GST on sale of pets? The sold animals suffer and DON'T benefit and the government loses huge tax revenues and does not benefit either. How come ? Except for the 18% GST on sales of pet care products like food, accessories, medicine and polo/race horses , there seems to be no tax applicable on actual sale of live animals or pets like DOGS , cats or birds . Perhaps because pet breeding and sales is linked to the largely subsidised and untaxed agriculture and farming business, producing food, dairy and meat for the nation, it has benefited from the compartmentalisation. However, it is certainly time to relook at this. In addition, most purchasers buy in cash or even by Paytm or bank transfer, so there is no real record of the transaction either. So the breeder often pays no income tax on the business income gained unless s/he chooses to. When GST was being firmed up, for some strange logic, or perhaps under the breeders lobby pressure, the finance ministry in its wisdom, exempted all sales of domestic pets for GST, except horses. Strange, isn’t it ? It is So as GST is relatively new, and the reasoning at that time based on good intent, let's revaluate this now at least.
Income Tax Implication : Recently a Husky valued at 8 crores was reported lost -it is staggering to think of the breeder marketing revenue implications. And the GST, Income Tax lost to government coffers! The business income from both backyard breeders, registered kennels and pet shops is huge - yet due to lack of regulation implementation ( see petition bit.ly/BucketteList ), there is little government oversight, Hence, no means of collating data or collecting taxes either . Most breeders are unlicensed - at least in Karnataka. Double whammy - no license fees and no taxes. There is hardly any income tax either as most income is unaccounted for. No wonder the breeder community is a untaxed and happy lot!
Income Tax Department Directive: Way back in 2011, it was good to read an Income Tax Department directive to keep tabs on all breeders who sell newborn puppies for huge profit, but sadly nothing concrete was observed after that. While the pet dog business may have then come under the scanner of the Income Tax department – who had then issued fresh directives to all its regional offices to keep tabs on all dog breeders – we have not seen much progress after that. Mar 23 2011 Mid Day : 'IT Dept Issues directive to keep tabs on all breeders who sell newborn puppies for huge profit. The Rs 500-crore pet dog business has come under the scanner of the Income Tax department.The I-T department headquarters, New Delhi, has issued fresh directives to all its regional offices to keep tabs on all dog breeders who sell newborn puppies for huge profits.All pet shops and known dog breeders are now under the surveillance of sleuths. A senior I-T officer said, "Most canines of good lineage are sold at exorbitant prices and without any receipts. Some of the deals even run into crores." According to the I-T directive (copy available with MiD DAY), it has been noticed in recent years that pet shops have spread rampantly across the major cities. These shops are technically licensed to sell animal food and accessories, but they also deal in canines and exotic birds to make a quick buck. The order stated that it is suspected that a majority of these transactions are outside the tax net, so appropriate action should be taken against them. Senior I-T officials, including Chief Commissioner P P Shrivastava, however, are tight-lipped about the directive and how they plan to crack down on the tax evaders.'
It always comes down to the money as they say. Therefore, it’s logical that if the government turned its attention on the breeding industry, perhaps they would not only tap the justified taxes on income and GST that they have ignored so far, but also ensure that through this spotlight, collection and regulation, dogs and pups for sale don’t suffer. NG Jayasimha, MD, Humane Society International, points out that rules to regulate the trade would help bring in more responsible pet ownership. The pet licensing system, though it exists, is not enforced.If pet breeders and shops get registered and licensed, the cost of buying an animal will go up and that would put an end to impulse buying, he says. Also, with registration, it would facilitate transparent adoption, help trace people who abandon pets, etc.
Regulate the pet breeding and sale industry! While animal lovers and welfarist may detest the animal breeding business, as long as it is recognised as an industry, pet sales must at least be regulated- both by laws, regulations, standards and proper taxes. Pet dogs and cats cannot be treated as agriculture livestock sales with subsidies and tax cuts- its an unorganised, thriving and largely illegal trade . Very few high quality, ethical breeders and pet shops exist. Governments world over are cracking down on unpaid tax losses UK Taxman recovers 5 million pounds in unpaid taxes from breeders in one year - but in India , we don't even have taxes to start with! Powerful organisations like Kennel Club of India (KCI) and Indian Veterinary Association (IVA) use their powerful lobbying to push back laws and remove tax impact.
The government can even allocate 30% of GST revenue gained, to shelters or rescues of abandoned dogs. Strict action must be taken in implementation. Fines should also include community service and blacklisting of cruel and non compliant breeders.
Pets and Buyers are also affected. Dog sales have become a quick and shoddy hobby business and this is a worrying trend from both a cruelty and tax revenue perspective, despite strong laws (poorly implemented, though) on Dog Breeding and Marketing 2017 and the Pet Shop Rules 2018. 'The unregulated and unorganised state of this industry leaves enough room for exploitation, be it of the puppies or unsuspecting customers, experts say. Animal Welfare Board Vice-Chairman Chinny Krishna says the dog-breeding industry is easily a multi-billion rupee industry. Pet shop and breeder transactions are in cash and the government loses much money on that count, says Krishna, pointing out that regulation will not just bring in more humane practices, but also bring out undetected cash in the system '
Shouldn't we all start somewhere? Let's start with this.
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