Tuesday, July 25, 2023

Who is right?

"Number of entities, including individuals, who filed income tax returns increased by 6.18 percent in 2022-23 to over 7.40 crore (74 million), of which 5.16 crore (51.6 million) declared zero tax liability, finance minister Nirmala Sitharaman said." TOI. Which means that only 22.4 million entities, which probably means companies and individuals, paid income tax. "The government has taken several steps, like expansion of the scope of TDS/TCS (tax deduction at source/tax collection at source), simplification of personal I-T, prefiling of ITRs (income tax returns), updated returns, new form 26AS, and non-filers monitoring system, which has helped in adding taxpayers." India's population is about 1,430 million. worldometer. Which means the total number of non-filers would be 1,356 million. How much would it cost to monitor all of them? Politicians and bureaucrats in India unequivocally believe that millions of Indians are cheating on their taxes because they have convinced themselves that the Indian economy is booming and all the people are getting rich. "India has overtaken China as the most attractive emerging market (EM) for investing in EM debt, as per 85 sovereign wealth funds and 57 central banks." Mint. if that is the case, why is the yield on the benchmark 10 -year bond in India at 7.095%, while the yield of 10-year Indonesian bonds is over 70 basis points lower at 6.316%. investing.com. This, despite "Investments by Russian banks and companies in Indian government bonds underline challenges in converting rupees into roubles, which has hampered attempts to widen non-dollar denominated trade between the two nations." ET. "The size of the Indian economy will cross $4 trillion in 2024-25 and the per capita nominal GDP will also cross $2800, said an analysis conducted by industry body PHD Chamber of Commerce and Industry." ET. "Amidst heightened global uncertainty the Indian economy has proved to be more resilient" because of "A conducive domestic policy environment, along with healthy performance of its key macroeconomic indicators have sustained the growth momentum of the Indian economy." said the Confederation of Indian Industry (CII). However, "The latest Reuters poll of 53 economists taken between July 13 and 21 showed the Indian economy would grow 6.1% this fiscal year," but "Asked how the employment situation will change over the coming year, 17 of 25 economists said it will improve slightly." Reuters. "It was claimed that there was a 58 million increase in jobs between calendar years 2019 and 2022, the highest in Indian history over three years," wrote Prof Santosh Mehrotra. But almost all the increase in jobs has been in agriculture which are poorly paying or non-paying. Mehrotra calculates, "The current government inherited about 10 mn unemployed; that number grew to 30 mn, we estimate, by 2019. Thanks to poor economic management during COVID-19, and a K-shaped recovery, open unemployment grew to 38 million by 2022 (PLFS)." If people are not working they are not earning. And if they have no income they cannot pay income tax. Whatever the chamchas say. 

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