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Originally Posted by diyguy Instead of the government making money, this has enabled unscrupulous guys into earning off the tax evaders. Such people will obviously go for the option that is least impact to them unless the difference in insignificant. |
The government would get their dues from the shop keeper who now has to deposit so much of cash. He would have to show his sales receipts etc. So if he has over priced the item, then the taxes he has to be paid would be on the over priced figure. If he shows a different invoice (with the actual value of the product), he would not be able to explain why the difference in money. I.e as per invoice the sale amount was Rs.10,000 but this chap is bringing in Rs.500 & Rs.1000 notes worth Rs.15,000!
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How he handles his reporting is of no concern, the point I was making is there are plenty of avenues to recover from this situation.
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That should be a concern; as that is the important part. The shop keeper will be the one who has to pay the tax (and not the black money holder). For the government it does not matter whether A or B pays the taxes, but the taxes should come in.
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I also read of the many cell phone purchases being made for resale later.
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The assumption is that there would be large number of buyers for these phones. And the person who brought the phone would have to keep it neatly packed, because once the pack is broken many of the products see a drop in their value. It is considered as a "used item". When people are finding less of liquid cash to spare, their buying priorities change. Buying a cell phone using liquid cash may not be the highest one.
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All this could have been avoided if there were a forced amnesty scheme at about 55-60% penalty imho...
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People did not pay up when a forced amnesty scheme which had 40% tax+penalty. Why should government be even more optimistic and give another plan with 55-60% penalty based amnesty? And you are also not factoring an important aspect of this drive:-
1. Rs.500 & Rs.1000 notes have the maximum counterfeit notes. Allowing them to operate in the market is only going to mess up things. They had to be pulled out of the market. Now irrespective of fake or original Rs.500 & Rs.1000s have to land up at the bank. And one old woman in KL had a very bad surprise when Rs.37,000 she got through
Hawala route was all fake. Money gone, and a police case as bonus!
2. Terrorist funding through
Hawala channels. This was becoming a major security problem for Indian. Terorrism being an illegal activity, had to rely on illegal ways to get their money.
Hawala was that scheme and the transactions were always through cash. As I write this one transport company in Hyderabad is now literally crying as their large hoard of cash is now lying as trash. There were areas where IT dept. and Sales Tax people were scared to go. Now they don't have to go any where; the black money hoarders are coming to the bank (or crying sitting in thier now useless cash piles).
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Originally Posted by Ironhide Jayati Ghosh, in the Hindu. |
To be frank, I have stopped subscribing to The Hindu (after reading it for 30+ years) after seeing their bias towards any thing and every thing which the current government does. I stopped it when I realised my subscription pay out, is like paying money to terrorist groups in India. So my comments may NOT be impartial.
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It could then start tracking all large sales of likely assets (such as land, houses, gold) and foreign exchange transactions, to follow up with those who had made them.
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What consists of a
"large sale"? The main problem is that these kind of sales were under-valued, or not shown in the records at all. Then how will government come to know of it? Land prices are shown less, to avoid registration costs. Gold sales may not appear in records at all.
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The biggest negative effect is the loss of liquidity for the informal economy, which has already been of massive proportions
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It is this informal economy which was also helping counterfeit currency circulation, and terrorist funding using the
Hawala route. The maximum amount of counterfeit currency was in Rs.500 an Rs.1000 notes. And did you notice one thing? This article does not mention any thing about the illegal
Hawala dealings which was the primary channel used to fund terrorist activities in India. I am sure The Hindu would not even mention this, as their current intentions do not look very India supportive.
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Originally Posted by msdivy What has happened so far is Govt has mopped the currency in circulation and the savings of the people which was held in cash. I believe that 100% of this white and IT cannot claim a single penny as the penalty. Best Govt can get is the tax on the interest paid by the bank on the deposit amount. |
Hmm.. Correct me if I understood you wrong. Are you saying that so far the money which was deposited is all white money? And no black money exists in India as liquid currency any where in India??
Sir, from Dec 31st every single Rs.500 & Rs.1000 note you see today are nothing but pieces of paper. There are lots of people who have stock piles of cash which has to be kept that way. Because depositing them in a bank is risky, as the amount there would be cross checked with their "sources of income". The friendly land lord who takes large amounts of advance money (10 months rent in BLR) all want it in cash, why? Because he does not want to show it as income. The flat deals, land purchases all have the values under-quoted and a chunk of the money paid in liquid cash. All these folks who have such cash reserves have now no where to go (other than to a bank). Next in line are the counterfeit currency dealers, who find that their game is up. Please see what happened to a woman in KL with Rs.37,000 worth of currency. And then the biggest hit would be to the
hawala dealers who were operating with impunity. Let this excercise get over; I feel we can see lots of "business houses of repute" standing exposed.
Did read this thread for a couple of (last) pages. Many of us seems to have over looked the factors of counterfeit currency, and
hawala money; both which are detrimental to the economy (and quite tough to catch).