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Old 13th December 2016, 13:39   #1621
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by blacksport View Post
Rs 200 is his take-home. If he has to give the govt another 30%, he will bill it to me not reduce from his take home. Simple math.
Can't get funnier than this!
Rs.200 is his gross income. He has to pay Rs.60 as income tax, and the remaining Rs.140 is his net take-home.
By choosing to not pay Rs.60, he is already evading the tax.
Let us please not try to justify the illegal actions, by terms such as service to poor.
Anyone who is trying to provide cheap service should do it through his own sources, and not by cheating IT department. If he is cheating Government on one hand, all he does is generating more business for himself & thus add more black money to his kitty.
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Old 13th December 2016, 13:45   #1622
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by blacksport View Post
Rs 200 is his take-home. If he has to give the govt another 30%, he will bill it to me not reduce from his take home. Simple math.
We can also view it this way... the doctor's actual fees is Rs. 140 (Assuming 30% tax as Rs. 60, just as a hypothesis), but because he doesn't pay tax, his take home becomes Rs. 200. Maybe you should check out a doctor who takes his fees online, pays his income tax etc. Does he charge more than the above doctor? If so, how much percentage higher? If both docs charge the same, then you know who is charging more.

Another point: such doctors must have paid lakhs to get admitted to MBBS course. They need to now recover this. Since such doctors pass their courses with minimum qualification marks, they do not get a chance to enroll into specialty courses. Which means, they are less qualified to get into specialty hospitals where fees are higher. So, they open some small clinic in your neighborhood and charge less fees but don't pay taxes.
If you are going to such doctors for small cold/cough, then it is fine. But if you have a different ailment, then you should take a considerable risk to consult such doctors.
I will wait for your comments negating my opinions.

Last edited by Eddy : 13th December 2016 at 14:58. Reason: No personal attacks allowed.
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Old 13th December 2016, 14:00   #1623
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

http://timesofindia.indiatimes.com/i...w/55956614.cms

This is outrageous. In one known case, he helped exchange 150 crores!
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Old 13th December 2016, 14:08   #1624
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by srishiva View Post
http://timesofindia.indiatimes.com/i...w/55956614.cms

This is outrageous. In one known case, he helped exchange 150 crores!
Catching corrupt bureaucrats is the 'unintended consequence' of demonetization. The way the whole demonetization process is structured will ensure the final beneficiaries will escape. At most, they will have to pay a fine and go back to their earlier ways.
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Originally Posted by Chetan_Rao View Post
Amidst all the hullabaloo, has any one heard any mention of politicians and bureaucrats being investigated/prosecuted so far? And can anyone shed some light on what exactly were the amendments made to the Prevention of Corruption Act recently, and its implications? I'm skeptical of media reporting, and would rather get a reasonable non-partisan opinion on it, if possible/available.

I did give it a read here and here. It does prima facie seem like stacking the deck in favor of bureaucrats, but I'd rather let someone more qualified than me on this stuff comment before I form any firm opinions.
Except for the Benami Transactions (Prohibition) Amendment Act, I don't see any new legislation. So after all the hype on these 'raids', 'seizures', not sure how much can Govt prove in court & ensure prosecution.
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Old 13th December 2016, 14:12   #1625
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by srishiva View Post
http://timesofindia.indiatimes.com/i...w/55956614.cms

This is outrageous. In one known case, he helped exchange 150 crores!
It's not 150 Crores

"NEW DELHI: A senior central bank official is one of nine men arrested in Bengaluru by the Central Bureau of Investigation (CBI), for allegedly exchanging Rs 1.50 crore of banned currency notes. "
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Old 13th December 2016, 14:17   #1626
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Chetan_Rao View Post
Not sure you're saying anything different than he is?

His point is the doctor will increase his prices to keep his take-home same as before so he isn't losing anything, while the end customer is paying nearly 30% extra to foot the bill for the doctor wanting to stay on the right side of tax laws, which is, reasonably speaking, none of the customer's business except to the extent of him not wanting to have anything to do with the said doctor.
You are right. Was just pointing out the fallacy in the math. The issue is that the doctor needs to now think:
  • Do I take home less and stay competitive in the market? OR
  • Do I charge more and potentially lose customers to doctors who charge less

The issue is that he is trying to stay competitive by being illegal. And people like blacksport are looking at this as fair means to save money.

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Originally Posted by Ferrari1976 View Post
And in case he needs to pay Service Tax, then he would have to add 15% more to 285!!! Essentially close to 50% will be added to his current non-taxed charges which he will recover from his patients!!
And as I always say, this double taxation needs to stop. I would prefer a single tax regime (similar for GST) which avoids multiple taxations and regulates tax flow consistently across all citizens.

I fully support that income tax be scrapped and all taxation needs to be through indirect taxes. That is one other way to bring about these kind of doctors into the tax brackets. Today the honest tax paying citizen is troubled as follows:
  • Say I make Rs 1850 as my pre tax salary (And I am in the 30% tax bracket)
  • So I pay 30% (appx) i.e. 555 as my income tax. That leaves me with 1295 as take home salary
  • Now let's say I go to a restaurant and have a nice meal worth Rs 1000
  • Now on that 1000 I first pay a 10% service charge i.e. 100
  • Next I pay Service tax (which is 14% of 40% of the bill + 14% of the Service charge) i.e. Rs 61.6
  • Next I pay 0.2% of Swach Bharat tax on the bill + service charge i.e Rs. 2.2
  • Next I pay Krishi Kalyan cess at 0.2% of bill + service charge i.e. Rs. 2.2
  • And next I pay VAT of 12.5% on the bill (Assuming it was all food and no drinks, else its 20% on drinks) i.e. Rs. 125
  • So total tax paid on the Rs 1000 by me is Rs 291. Total bill is 1291
  • So the total tax I paid to the govt, post me making that Rs 1850 is Rs 846 (Rs 555 as Income tax and Rs 291 as the tax on meals), which is whopping 45.7% of my gross salary

So a honest citizen pays 45.7% of the Rs 1850 as tax to government (And has Rs 4 in his pocket)
A income-tax-evader pays on Rs 291 (i.e. 15.7%) of the Rs 1850 to the government (And still has Rs 559 in his pocket)
And a dishonest cash-paying not-wanting-a-bill guy pays Rs 0 to the government (And has Rs 850 in his pocket)

And after all this, the media expects that my sympathy should be with dishonest cash-paying -not-wanting-bill guy because he is standing is a queue. And okay, I understand that not everyone who stands in a queue is evading taxes. But you get the point on double taxation for the honest citizens, right?

Last edited by ptushar : 13th December 2016 at 14:27. Reason: Typo + Added text
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Old 13th December 2016, 14:27   #1627
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by srishiva View Post
http://timesofindia.indiatimes.com/i...w/55956614.cms

This is outrageous. In one known case, he helped exchange 150 crores!
You forgot the decimal between 1 & 5, your outrage is still valid.

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Originally Posted by SaNdY_AR View Post
It's not 150 Crores....
The missing decimal is not the cause of the outrage, an RBI functionary involved in laundering is
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Old 13th December 2016, 14:33   #1628
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

My first post here on this topic.
I am not affected by this measure as i do not live in India. I live in one of the financially liberal cities with a low tax regime but i am following this very closely as i am still trying to make up my mind about its pros and cons and what it holds in the short and long term for the country's future. I would like to apply my own brain to judge and analyse rather than trusting any politicians or economists whichever side of the fence they might be sitting in.
I am well aware of the pros of this move and in principal, agree with a 'less-cash' society. However there are a few things which make me uncomfortable.

- I agree that a less cash society is more efficient as the money in the system can be utilized more effectively, but a question I would like to ask is- 'Should I trust the system'?
History shows that repeated governments in India have been taking people for a ride, and I do not think that this government has done enough until now for me to trust them more than I did the governments of the past.

- The system should be changed and made fairer for the people to start paying tax rather than forcing people to comply with the rotten system.
In this way I liked the Arthakranti proposal of a tax free regime with only banking transaction taxes which is a simple way to generate income for the government and at the same time cleaning up the whole system which creates black money.

- ‘Freedom’- and this is very important for me.
At the end of the day, I should be able to transact in the way I feel comfortable whether its cash, paytm, card or anything else. The government cannot force me to comply into following paytm or all this nonsense if I don’t want. With our government pitching about the ease of paytm or ewallets makes me even more skeptical about its motives and corporate interests.

These are still early days and I need to see the next moves to make a judgement. If this govt is really serious about removing corruption then they should change the system, a less and fairer tax regime, welfare and empower the poor, better infrastructure, less corruption and simple bureaucracy. Only then can this be seen as a game changing move.

PS: I also don’t want to see the face of our PM looking at us everywhere, newspapers, billboards, the lot. Who pays for all this?

Last edited by garychopper : 13th December 2016 at 14:37.
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Old 13th December 2016, 14:42   #1629
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by ptushar View Post
And as I always say, this double taxation needs to stop. I would prefer a single tax regime (similar for GST) which avoids multiple taxations and regulates tax flow consistently across all citizens.
You are absolutely right about the multiple taxation system. The introduction of GST is supposed to eliminate this. GST will also make the system more transparent provided it is implemented properly.
But, I don't think any Govt. will consider abolishing income tax as that is the biggest contributor to the Govt's income.
However, with the implementation of GST, there is a good chance that the tax slabs will increase considerably.

At present, the lowest slab of Rs. 2.5 lac is really pathetic. It is like you are taxing someone earning Rs. 700 per day. Even a small time vegetable vendor earns more than this on a per day basis. So, it is harsh to include such people under a tax bracket. Naturally tax compliance gets hit as such people will never want to declare their income.
In private firms, any person with close to 4 - 5 years experience earns more than Rs. 10 lac., so he falls under the highest tax bracket category notwithstanding the tax sops he invests in.
If Govt. need to improve tax compliance then the tax slabs need to be rationalized. Only then people will spend more and more tax can be collected via GST.
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Old 13th December 2016, 14:49   #1630
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by srishiva View Post
http://timesofindia.indiatimes.com/i...w/55956614.cms

This is outrageous. In one known case, he helped exchange 150 crores!
150 crores seems to be a typo since the article talks about 1.50 crores which is a much smaller sum. Also the senior RBI official headline is misleading when one reads through the article.

Last edited by vishnurp99 : 13th December 2016 at 14:50.
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Old 13th December 2016, 14:56   #1631
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by garychopper View Post
- ‘Freedom’- and this is very important for me.
At the end of the day, I should be able to transact in the way I feel comfortable whether its cash, paytm, card or anything else. The government cannot force me to comply into following paytm or all this nonsense if I don’t want. With our government pitching about the ease of paytm or ewallets makes me even more skeptical about its motives and corporate interests.
No. The govt is not pitching for these companies. These companies are spending money on marketing themselves. Whether it is PayTM, or Mobiqwik or Freecharge. Moreover, today's reports suggests that PayTM is actually making a loss.

What the govt is promoting is Aadhaar based payments, UPI, IMPS and Rupay cards. UPI is far far superior to any e-wallets, just that people need to use it once to realize its true potential

Moreover, the govt is also promoting payment bank licenses. So PayTM, Airtel Money etc will soon have payment bank licenses which will allow them to further widen their base and even allow them to pay interest. This will make them far more competitive against regular banks when it comes to payments. This will further increase competition and those who invest in technology, ease of use at the lowest price points will emerge winners.

Technology will also mean that less people will need to actually walk into a branch. Take Citibank as an example, they charge Rs 100 for any transaction if you walk into a branch. The same transaction online or on a mobile is free of charge. This will soon happen to many more banks. This will further help banks to reduce their branch footprint and further reduce their charges to customers.

The future is bright. And its coming to us faster than one can imagine.
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Old 13th December 2016, 15:07   #1632
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by garychopper View Post
I live in one of the financially liberal cities with a low tax regime but i am following this very closely as i am still trying to make up my mind about its pros and cons and what it holds in the short and long term for the country's future.
Hey Bro, Just curious, which country do you live in and what is the income tax range for that country?
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Old 13th December 2016, 15:09   #1633
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Hey Bro, Just curious, which country do you live in and what is the income tax range for that country?
Hong Kong. (17% Max)
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Old 13th December 2016, 15:55   #1634
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Looks like Venezuela has also demonetized its largest denomination 100 bolivars. Now not sure what socialists and liberals will say about this. I agree that situation there is altogether different and grave.

Finally 500Rs notes reaching Bangalore in good amounts. Gave 2000Rs to an auto guy and got change in 500s. So expect massive improvements over 2-3 weeks.
Quote:
Originally Posted by garychopper View Post
Hong Kong. (17% Max)
What is the tax compliance figures in Hong Kong?

Last edited by poloman : 13th December 2016 at 16:11.
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Old 13th December 2016, 16:26   #1635
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by poloman View Post
Looks like Venezuela has also demonetized its largest denomination 100 bolivars. Now not sure what socialists and liberals will say about this. I agree that situation there is altogether different and grave.

Finally 500Rs notes reaching Bangalore in good amounts. Gave 2000Rs to an auto guy and got change in 500s. So expect massive improvements over 2-3 weeks.

What is the tax compliance figures in Hong Kong?
Venezuela has replaced them with coins. And they have sealed the border to prevent anyone bringing them in to replace.
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