Tax is not right of a government but is part or a share put by an Individual in the National progress and is to be utilized for the purpose of growth, security and infrastructure. Tax is the responsibility of each and every citizen and its avoidance is anti-national. We all share our burden of household expences then why not share it for the Nation and common wealth of the citizens. However, tax must be simple, easy to understand and implement and not burden on a common man. More than taxes Indians fear Taxman, who can harass a common man and can even make him loose his peace of mind and trade. This is nothing but punishment for honesty.
Apart from tax, its compliance and its observation and collection cost, accounting are expences which as on this date equal or exceed tax output. This is nothing but waste of resources. Tax in name of Profession Tax, Income Tax, Wealth Tax, Excise, Service Tax, Profession Tax, Import duty, Value Added Tax, B.M.C. Tax etc.. etc.. so many are there with so many windows that a person is likely to make many errors in his life time resulting in chaos in his life. I have hence drafted some simple proposition which must can ease this situation. Tax calculation and accounting must not take more than 2% - 3% of the resources of a person and must be simple and make the person concentrate more on work and less on tax. This will enhance output and automatically taxes will be generated.
Every person above the age of 18 and having earnings must pay a minimum Rs.1,000.00 towards tax. This can be cover up the profession tax which we call. Thus necessity of filing profession tax will be done away with. The exemption must be simple of Rs.2,40,000.00 and anything above this irrespective of age, class and gender should attract Rs.1,000.00 + 15% flat tax over that amount. The concept of exemptions must go and each and every income is taxable. Hence no 80D, 80CC etc. Also now tax is gender and age neutral.
Then comes concept of H.U.F. I think the option must be flat 15% and no exemption as no religion must get any advantage and most H.U.F. files are created to save taxes and not with feeling of undivided family. So it will be Undivided Families and people from all religion can hold joint properties. For the H.U.F. who want to dissolve files must be given a years time for distribution and the share will not be taxed. Similarly latter also division share will not be treated as income.
Then comes the source of Income. I wonder why we have special treatment for agriculturist. Is a farmer earning Rs.20,00,000.00 per annum not a citizen of India or has got a power to be feeling that he is not responsible for this Nation spending. Similarly, investor of all natures cannot claim any special treatment. Thus all exemptions in form of export units or agriculture of investor goes off and there is no concept of long term capital gains. Income is Income and must be taxed at regular rates irrespective of its source. Hence gifts of all nature is a income and must be taxed. It is the Taxpayers contribution to Nation building. No special treatment for equity shares. Similarly rent and other incomes must be without exemptions.
Then comes concept of partnership tax and Company tax. Well partnership must not be taxed separately and the shares must be added with that of the Partners. Though I agree that the return has to be filed separately.
The Corporate must pay flat Rs.3,000.00 + 25% tax with no dividend distribution tax or any other taxes. Perquisites of all nature must be added to that of the staff and it must be not having salaries but Cost of Man power.
The A.O.P. must also be taxed according to Corporate.
Then comes concept of depreciation and R.O.C. well I think when we have to file every thing with registrar of companies then why not have it as a single window of tax also and must be called corporate compliance and tax divison. Hence no need for having two returns. Depreciation must be flat 15% ( for goods with long life) and not reducing balance and 25% for short life. Thereafter when it is disposed off its sale value will be deducted in cost if the asset is replaced and if not added in income. Thus we get out of cluster of separate filing and separate depreciation for ROC and Tax.
Then comes Wealth tax. This is a controversial tax and needs to be scrapped. To accumulate wealth is an Indian tradition and for centuries precious stones were accumulated and hidden. This right exists.
Then comes Audit. Well the exemption must be Rs.3.00 crores for traders and Rs.30.00 lacs for professionals. We know that even with audit Satyam has gone burst hence Audit must only in high Income cases. Internal Audit can be done by a person any time at will.
Then come Excise. I believe in taxing big sources High. Hence where there is no or little scope for evasion like automobiles, tabacco, P.O.Y., Petrol etc. This must be heavy to compensate all others and where the scope is high better keep tax at bay as tax administration will be costly.
Then comes Octroi. Well movement of goods is must and Octroi Naka is a place where corruption breeds. It would be good if instead of Octroi we have it included in GST. GST must be pecked at 15% flat and no other tax must be put. So you just have to pay the difference of the amount payable and amount paid. This will reduce the scope of Income pilferage and the return must be filed with Income Tax return and hence there is no two window and need for cross checking and all this will reduce paper work.
T.D.S. must also be done away with. If you are having a P.A.N. and have filed returns on time each year for last 3 years then you must get a certificate online that the persons income is not subject to TD.S. and pains of deduction, deposit and returns is saved and only when you are not doing so that T.D.S. must be suitably deducted.
The system of having changed duties on each budget is a taboo. It is intelligence which must grow and not the burden of compliance. Budget means that you make your estimates and not in any way means system of lobbing which is eating the national resources. As per Hindu Dharm, we have Dhanteras, where in we can make a budget and we have Ekam is begging of new year and Holi marks end of date of filing returns. We 80% people do it and March is an addition to it making way for more accounting work. So why not go with majority and follow Vikram Samvatshri.
We need to have Bank account Nos. which have prefixed Bank code in the UID and UID and PAN must be same. So track the Bank accounts in fraction of seconds. Moreover, the Bank account will get automatic updates to send the transaction details of any person whos transaction exceeds 30% of annual turnover in a month or excessive funds are moved. This system needs to be designed. The cap on number of accounts to be held must be there just like Audit Limit. So if you have a turnover of say Rs.3.00 crores then 2 Bank accounts, say 50.00 crores upto 4 accounts etc. This coupled with no Banking charges will make things super fine.
This system has to be accompanied by more reforms to be unvailed from time to time. The concept of common man watching budget will go and it will be a reduce taxing and other budgets. Life will be planned and smooth. Some tunning left for others as I am just a common man.
Thus instead of many tax codes, have just one tax code which includes all taxes under one single code and also all compliance including partnership. Limited partnership and company law be separate.
Imagine no Shops licences etc. all under one code and one window filing.. Isnt life simple and peaceful......Simplicity reduces corruption
More to follow soon. Keep track.
Siddharth Murarka
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