Monday, June 24, 2019

Earn less to be safe?

"A Finance Ministry action earlier this week against over a dozen income-tax officials for alleged corruption and professional misconduct has given rise to conjectures and theorisations that a crackdown against tax evasion is in the offing." "The cash ban did not achieve the government's desired objective of digging out black money, though it offered several fringe benefits." "A reliable estimation of unaccounted income in India was not possible, a standing committee on Monday said while submitting the final report before both houses" and "senior finance ministry officials said that a reliable estimation of black money is extremely difficult, since the three independent studies threw up varied results, showing that it could be anything between 7% and 120% of gross domestic product (GDP)". The National Institute of Financial Management "estimations of total illicit outflow in 1990-2008 was at Rs 941,837 crore ($216.48 billion)". Brilliant. They don't know and yet they resort to vicious 'tax terrorism' against citizens to extract more money. This results in appeals of which "The taxman unambiguously loses 65% of his cases." "When the NDA government came to power (in 2014), the amount locked in tax dispute was Rs 4.67 lakh crore (Rs 4.67 trillion); it was at Rs 10.16 lakh crore in March 2018, an increase of about 2.2 times." Demonetization was supposed to push India towards a cashless society since black money cannot be deposited in banks, without giving rise to questions, and so must be held in cash. But, "Currency in circulation (CIC) has jumped by 19.14 percent to a record high of Rs 21.41 lakh crore (trillion) as on March 15, 2019, indicating that cash is back in the reckoning in the financial system." The government should be celebrating the report because "ILO (International Labor Organization) estimates that 90 percent of India's workforce is in the informal sector" and all these people are paid in cash. A lot of such people are migrant workers who move in search of work. It is not possible for them to open bank accounts at each new place they go to because of stringent know your customer (KYC) requirements at banks. Though fees are much higher compared to bank transfers, "As many as 65 million transactions were effected during 2016-17" through post office money order system in India. Labor force participation rate (LFPR), which measures the share of population which is either working or looking for work, was 54.9% for men and 18.2% for women in rural areas," wrote R Kishore. It is 57% for urban men and a dismal 15.9% for urban women. Of those who are working, 92% of women and 82% of men earn less than Rs 10,000 per month. You have to earn Rs 21,000 per month to start paying income tax in India. People aren't working or earning enough. Perhaps, if they treat people with respect the economy might improve. More people will get jobs and pay taxes.

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