After demonetization a lot of money has been recovered . Though i do not have any statistics on how much that is , i think the biggest move will be abolishing Income Tax .
This move not related to GST in a lot of sense as one is direct and the other indirect tax. This move is going to be more of a political move . As elections are approaching near day by day , this is going to be a sort of gift to the 3–4% of people who pay tax .
A pune based Economic Advisor body gave a proposal called Arthakranti proposal divided into two parts :-
Part A
- Recall and scrap old high denomination notes Rs.500 and Rs.1000.
- Introduction of new Rs.500 and Rs.2000 Notes
- Old Rs.500 and Rs.1000 notes to be deposited into account.
- In 50 days bring around 15 Lac Cr in banks.
Part B –
- Reduce Interest rate on saving bank account from 4% to 2% or less.
- Reduce fixed deposit rates drastically.
- Reduce home loan rate and keep it up to 7-8%.
- Implement GST by 1st September, 2017.
- Abolish Income Tax for individuals.
- Reduce corporate tax rates.
- Introduce new Banking Transaction Tax.
By looking at this , i can suggest not one but next 3 moves.
Initially i spoke of people depositing money in there banks , if it all happen right then an estimate of 15 lac cr notes is going to be deposited .
Now a question arises that once the income tax is removed how the government will get money to run the nation. Well, once all cash will be deposited into banks everyone will be enforced to use banking system for every transaction. New banking transaction tax will be introduced. Every transaction such as cheque, Demand draft, RTGS, NEFT, Credit Card, Debit card etc will come under this new tax system. The rate of the new banking transaction tax will be 0.10% to 7%. Everyone including farmer will be covered under new banking transaction tax system. The government will directly get the income based on transactions. No black transaction will be entertained. The strict rule will be formulated for unaccounted money and non-banking transaction.
Benefits of Implementation
- Transparency in Economy
- More purchase power to individual
- Saving in amount of tax paid
- Drop in commodity prices
- Availability of Loans from bank at lower rates
- Terrorist and anti-national activities will be eliminated
- Significant growth in the employment
- Indian economy and business will be globally competitive
By- Yash Hoskere
