[TD_GHY]

Originally Posted by haria

Is it also because of cynicism that the the govt will not do well the tax collection ??

lot's of charitable institutions - which are religious neutral - are getting decent cash flow with no compulsions /forcing, primarily because people who contribute, can see something tangible happening or is having the trust that it will put to good use...

I think, if there is better transparency in how the tax collected is put to use, people will have less reticence in paying up tax.

Take for instance bangalore - the road tax is highest, (all taxes are high!) compared to the rest of the states.. the infrastructure - pathetic.. always the same excuses from the govt!

Trying to offset one wrong (cheating on tax) by one right (donation to charity) does not make it right. Paying the right tax while also donating to charity does.

It is only an excuse by "concerned" citizenry that because their taxes will not be used amicably, they won't pay their tax. For that matter, charitable institutions are more opaque than Government institutions. A snippet of some news headlines/stories

Only 10% of 22 lakh NGOs file returns: CBI - The Hindu

That is one NGO for less than 400 Indians, and many times the number of primary schools and primary health centres in India.- The Indian Express

India has one cop for every 940 people, an NGO for 535 - Times of India

Makes me wonder how despite so many "efficient" and "transparent" institutions, India is still not a better place.

You may never know how NGOs gets funds, where they use it, how they use it (since you can't force them to show you except what they want you to see from the outside), you have provisions of RTI for public institutions.

Governance and nation building is not an easy and quick task as many would like to believe. Taxes are just one part of revenue source for Govt. Had it been adequate, there wouldn't have been the need to go in for external loans every year.

Now, why will a person donate to charity but not pay tax
1. Donations can be used for tax rebates under some section 80
2. You get to click a photo and post it on Facebook and also brag about it. I saw one such post yesterday night itself
3. It also acts as the same way as a religious offering. Donation for welfare of.homeless, disabled to earn "punya" or "blessings" of God
4. Genuine humanity reasons.

When you see a person working with a NGO working for the homeless driving a 30L+ Audi, you know where all the "transparency" lies

[maddy42]

Our district has primarily agriculture income (and i know you folks will jump on us) and we have a level after which you need to start paying taxes. The IT dept basically did the lazy way around and sent every holder of a bank account an Income tax notice.

So who all got the notice?

My neighborhood chaiwalah who is a one man show, working with firewood to make tea in a slow village.
My grandpa who gets a teachers pension and is currently bed ridden from the past one year.

We got a notice for the period of 2010-2014 and then once declared they asked us for 2001-2010. How do they expect us to have a realistic idea of the same?

IT folks if your listening. There are a lot of small(big cough cough) traders who sit in a office with just a table and couple of chairs and a tv and buy produce and trader. Go after them as you will be surprised by the scale of their operation.

Maddy

[shajufx]

Originally Posted by shajufx

I have a practical doubt, it would be really useful if someone could clarify things. Suppose my income is from speculative genre which falls in the 33% taxation, I am paying that through regular filing. Now when I pick up a 50 lakh wheels, I pay around 20% in Bangalore as road tax. So in effect I am paying 53% of my hard earned money to the government. That means I need to have 75 lakhs to buy a 50 lakh vehicle in reality.

Am I missing something? Guys please throw some light.

Just adding some real time figures to the above post, which is still awaiting some input from experts !

Part of the invoice received last week:
Range Rover Evoque SD4 Pure Ex-showroom: 4,946,400, RTO Tax: 1,028,291
Thats close to 21% in RTO
To re-frame my old post, if I earn 1 cr through speculative income, I pay 33 lakhs via declaring and I am left with 67 lakhs, which in reality enables me to buy only a vehicle thats approx 53 lakh ex showroom (actual total goes much more than that with the insurance and warranty added) ! If I don't declare my original figure, I save 33% (which you term as black) but still end up paying 21% while buying the wheels I want. So, in reality, there is nothing called 100% tax evading !! One way or another you are axed !! My only doubt is: are the above figures true or do we save something in the entire process ?

Originally Posted by TD_GHY

...When you see a person working with a NGO working for the homeless driving a 30L+ Audi, you know where all the "transparency" lies

I know few people, but I think they use their excess to do charity works, without compromising their standard of living ! At Least they are giving, how many people feel happy giving their money to others regardless of what figure they earn !

[pgsagar]

Most politicians have fleets of luxury cars. But in pre-election declarations, they say they do not own even one car. And technically, they are not wrong, because none of these cars are registered in their or their immediate family members' names. This is how things run in our country. And that 1% or 3% which pays taxes are squeezed more and more.

[Nav-i-gator]

Originally Posted by shajufx

To re-frame my old post, if I earn 1 cr through speculative income, I pay 33 lakhs via declaring and I am left with 67 lakhs, which in reality enables me to buy only a vehicle thats approx 53 lakh ex showroom (actual total goes much more than that with the insurance and warranty added) ! If I don't declare my original figure, I save 33% (which you term as black) but still end up paying 21% while buying the wheels I want. So, in reality, there is nothing called 100% tax evading !! One way or another you are axed !!!

100% tax evasion is only used for direct taxes. In relation to above example, If I earn 1 Cr from Salary, I CANNOT HIDE it (have to pay 33% direct tax, as TDS), and want to buy same vehicle as you (who CAN hide it by not disclosing), we both have to pay that additional 21%.

[shajufx]

Now I get an idea why we have so much undeclared things here and even outside the country. Our FM is been talking about GST, is it something that can help in this scenario?

[Nav-i-gator]

Originally Posted by shajufx

Now I get an idea why we have so much undeclared things here and even outside the country. Our FM is been talking about GST, is it something that can help in this scenario?

Not really, GST is more into simplifying corporate taxes. Rather than paying for plethora of different taxes, excise, octroi and other taxes/surcharges (which again vary from state to state), GST will be uniform across India. This will ensure ease of doing business in India as a whole. Nothing to do with income tax of individuals.

On a side note - Some states are opposed to GST due to similar reasons as salaried class people are so knocked off to see their income being levied with taxes whereas the majority of better off individuals are not paying taxes. States which are more industrialized, earn more taxes. GST will be levied at the point of consumption rather than at the point of production. States with high concentration of manufacturing units (Gujarat, Maharashtra etc) will stand to lose net income, while net consumer states (UP, Bihar etc) will earn more IF the GST collection is not distributed in some sort of weighted manner(which is yet to be decided in a manner acceptable to all). This is the basic point of contention (I may be wrong though).

[shajufx]

Originally Posted by Nav-i-gator

Not really, GST is more into simplifying corporate taxes. Rather than paying for plethora of different taxes, excise, octroi and other taxes/surcharges (which again vary from state to state), GST will be uniform across India. This will ensure ease of doing business in India as a whole. Nothing to do with income tax of individuals..

Interesting. It would have been really great if every state RTO departments followed a single slab. Do we ever get to see that?

Somehow I dont really agree with the idea of tax paying citizens claim that they support the rest of non paying crowd. How can it be? One wouldn't say that if he worked or did business in Middle East. Here we have tax on everything right from a pack of salt. Every Indian one way or other end up paying tax in different forms. And we have lakhs of crores collected much more than what is actually required. Sadly not even half gets useful for the crowd. What we need is accountability of every penny collected rather than running after non payers. Don't you guys agree?

[Nav-i-gator]

Originally Posted by shajufx

Somehow I dont really agree with the idea of tax paying citizens claim that they support the rest of non paying crowd. How can it be? One wouldn't say that if he worked or did business in Middle East. Here we have tax on everything right from a pack of salt. Every Indian one way or other end up paying tax in different forms.

Sir, I have already posted regarding this in my previous posts. let me reiterate.

Yes, every Indian pay tax, indirect tax. But that tax does not differentiates between rich and poor, unlike direct taxes which are not levied on the "real" poor (or levied at a lesser rate). Ambani pays the same Tax when he buys a toothpaste or a pack of common salt as a starving farmer of vidarbha.

Adding to that, if direct tax collection is less (due to tax evasion by people who "choose to" hide their income), govt is forced to increase indirect taxes. This is exactly what is happening in India. VAT, service tax, surcharges and cess, all are increasing. Needless to say, lower income group is the one who is max impacted.

[shajufx]

Originally Posted by Nav-i-gator

Yes, every Indian pay tax, indirect tax. But that tax does not differentiates between rich and poor, unlike direct taxes which are not levied on the "real" poor...

Agree to your point, my concern is the misuse of funds that are already collected this way ! We are bombarded with political scams that are never ending and then we have people who take head banging figures from public sector banks and leaving the country !

Think about this: Is it easy to put an end to the misuse of public funds through stringent measures OR run after millions of non paying names that has no guarantee on any specific figures ? Personalise this situation as your family matter and see how different it sounds. You have few crores in your bank account earned over the years. You also have many friends and family who have borrowed from you but not returned. Dont you think keeping a tab on your monthly expenses is easier than running after people who owe you ? My point is spending what you have wisely makes more sense than running after people who may or may not return your money !

[V.Narayan]

The taxman cometh......at least quotes on him do......

“This is a question too difficult for a mathematician. It should be asked of a philosopher"
― Albert Einstein (when asked about completing his income tax form)

“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
― Winston S. Churchill

"A fine is a tax for doing something wrong. A tax is a fine for doing something right."

And the best for the last...

"We don't pay taxes. Only the little people pay taxes." - Leona Helmsley
(Leona was an American hotelier millionaire who once owned amongst other things the Empire Estate building. When she died in 2007 she famously bequeathed $12 million in her will to her pet dog 'Trouble' and nothing to 2 of her grand children)

[FrozeninTime]

Originally Posted by SuperFlyBoy

But I simply cannot believe that they are able to give those massive pay increments to government servants based on our 1% of taxes paid. As others mentioned, must be coming out of the other taxes...

Just to clarify even though its off topic - Only top tier government servants have benefited from 7th pay commission which includes Joint secertary and above. Nurses and doctors have been given a raw deal as there is reduction in NPA. I can say this because net increment proposed is miniscule and pay commision is yet to be implemented. Also note from 2003 onwards there is only contributary pension for which a certain percentage is cut from a person salary and government doesnt contribute to pension. So there is no bonaza for government employees instead I would say IT sector gets bonaza every year seeing there is landfall profits made by them which makes me wonder why people are barking at wrong tree.

A good 15- 30 % don't pay tax as their income is below taxable income this includes sizeable number of BPO employees and farmers who are exempt.

I feel Government should stop subsiding companies through tax holidays and cheap land in view to attract investment. It only creates crony captialism.
After Mallaya episode and famed 2G scam I feel this news is more hype and just to keep salaried class in check just like in licence Raj days.

[shobhitk]

Originally Posted by AutoNoob

PS: some 10 years back I heard one clerk in a government office discussing with his colleagues. He was planning to buy a Honda City on loan and paying back loan in 6 months to avoid detection. I think it is mandatory in government service to declare any purchase beyond a limit (Rs. 10,000 IIRC)

All the government servants are governed by 'Conduct Rules' which require him to report purchase of all the movable property (like car, TV, computer etc), the price of which is more than Rs. 5000, to the controlling officer, with source of income.

Strict adherence of rules should bring black sheeps from public sector as well as from the private sector, to the book.

[anand_lukose]

Couple of ideas I have which I would love to hear feedback on.

1) RBI needs to reduce the lifespan of a currency note. IMO, its in circulation for too long. If the circulation can be brought down aggressively, it can help in control the flow of black money, counterfeit and even reduce the expenses in the long term in implementing such an exercise.

2) Remove the 1000 or heck even the 500 rupee note. This sounds radical but other countries are also mulling removing high denomination currencies. Imagine one's black money being 2 times or 10 times bigger and heavier !

3) Make Voluntary disclosure norms easier. I believe many individuals still do not opt for it due to the fear of follow up investigations.

4) Make the punishments harsher. Name and shame. If the Panama papers grabbed so much headlines, I feel its a good thing and we need to see more.

5) Tax on cash transactions -This I believe will be the most difficult one but can have a gradual implementation. Start with Petrol pumps and Retail shops, move to recreation and hotels, so on and so forth.

6) Put a hard deadline stating that Banks can no longer accept cash deposits. If they want to, they will lose x percent as TDS. Similarly, put an ATM withdrawal tax. The reason the average ATM withdrawal is increasing is not because of inflation, its because of restrictions and charges on ATM usage, causing people to withdraw more than they need, increasing cash transactions in the process. If each withdrawal attracts tax, the onus will be on the payer to demand a cashless transaction.

[Nav-i-gator]

Originally Posted by shajufx

Think about this: Is it easy to put an end to the misuse of public funds through stringent measures OR run after millions of non paying names that has no guarantee on any specific figures ? Personalise this situation as your family matter and see how different it sounds. You have few crores in your bank account earned over the years. You also have many friends and family who have borrowed from you but not returned. Dont you think keeping a tab on your monthly expenses is easier than running after people who owe you ? My point is spending what you have wisely makes more sense than running after people who may or may not return your money !

Agree 100% sir.

But these are things which you and me can't change. It all boils down to the crab mentality. I am paying tax, so I want others to pay it as well. Or allow me to "Not pay any Tax" also. Why only me?