Abolish high-value currency and existing taxes

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Abolish high-value currency and existing taxes

Tuesday, 31 May 2016 | PNS

Dr Mohan Kumar Nanda, an eminent Chartered Accountant with innovative ideas and concepts was born in Mayurbhanj in 1961. He bristles with brilliant ideas and solves taxation conundrums to perfection by the slightest touch of his mental magic wand. He graduated from the Madras University and is also a qualified Company Secretary. He is the first ever Chartered Accountant in Odisha to obtain PhD in Commerce. He has authored a book ‘A step by step guide on Odisha VAT’. He has also authored another book ‘Income Tax Ombudsman’ for redressal of grievances by taxpayers without any cost. Dr Nanda is a fellow member of three premier professional bodies, the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India and the Indian Institute of Surveyors & loss Assessors. He is also an associate member of the Institute of Internal Auditors, USA. He has come out with another innovative idea for abolition of all direct and indirect taxes including Income Tax. In an interview to The Pioneer, Dr Nanda shared his vision with Sugyan Choudhury for a vibrant India sans the cumbersome taxation system.

 

Dr Nanda, how do you feel that the Income Tax can be abolished in IndiaIJ

Ours being a 130-crore population country, we have to understand the economical and mental conditions of people. Due to continuation of the British system of governance, the lower strata of the society are exploited by the higher strata. Further, even today people get scared on hearing about court, Income Tax, Sales Tax, police station and many such authorities.

As we all know, money is the root cause of every nuisance. And the Government’s prime objectives should be to collect taxes without directly involving people. This can be achieved by (i) abolition of high-value currency, (ii) abolition of all existing taxes and cesses, (iii) introduction of manufacturing and transaction tax. We may call it Innovative Taxation System (ITS). This will bring back the feel good factor of people and slowly eradicate distrust, dishonesty, fear and untruthfulness among them. Everybody will be tension-free.

 

What do you mean by abolition of high-value currencyIJ

High-value currency such as 1000, 500 and 100 rupee notes, the cause of corruption, are to be abolished within a fixed timeframe, say two years. This will reduce printing of fake notes, hawala transactions, bribery, looting, theft, burglary, murder, rape and overall corruption. Everyone will use banking system for higher transactions, particularly after post offices becoming banks. For small purchases, currency of 50, 20, 10 are available.

 

Will you please elaborate the manufacturing and transaction taxIJ

Manufacturing tax is a tax chargeable on cost of sale at the factory point (similar to Central Excise) with maximum of tax. It is an indirect tax and consumer is not involved directly.

Transaction tax means ‘banking transaction tax’. All the bank accounts are to be classified as personal (Savings Account) and Business Account (Current Account). Tax will be charged only on deposits. Rates for different business accounts will be prefixed depending on the commodities traded. Tax will automatically be deducted from the account in excess of Rs 10 lakh of deposits depending on the category of classification, i.e., grocery shop, garment shop, jewellery shop, etc. There will be no tax for deposit up to Rs 10 lakhs either in Personal/Business account in a financial year. One can have maximum of two bank accounts to operate.

 

In a federal system of governance, how will the Centre share the money with the StatesIJ

The Centre will distribute 50 per cent of the collected tax to the States based on the population as per last census. The State will spend the money for administration and developmental works. Out of balance 50 per cent, the Centre will meet its expenditure and finance for all the Central projects with national importance and other developmental works including natural calamities.

 

In an Innovation Taxation System (ITS), will the Central Government be able to collect more revenueIJ

Yes. The machines are 100 per cent reliable than men. Man by nature becomes greedy and manipulative. Hence, the system will automatically work and involvement of men is marginalised; hence, no corruption and no diversion of funds.

As per available estimates, the Centre and all States together collect revenue of about Rs 60 lakh crore and spend accordingly. If an Innovative Taxation System is adopted, the Centre will collect revenue of more than Rs 100 lakh crore. At present, the estimated bank transactions are about Rs 1,000 lakh crore which will become at least Rs 2,000 lakh crore on implementation of an ITS. Therefore, collection from manufacturing tax and banking transaction tax will be more than Rs 100 lakh crore. Moreover, due to multiplicity of transactions, every deposit will generate revenue from banking transaction tax.

 

Which other countries have different taxation systemsIJ

Our neighbour Bhutan has a method of calculating “Happiness” as the National Index like GDP in India. Similarly, Sweden is a currency transaction-less country. Countries like Canada, South Korea, France, Germany, Australia, Belgium do more than 90 per cent transaction only through banks. Therefore, we have to devise a new system of taxation which must be simple and give confidence to people to become good human beings with positive thinking and honesty.

 

Will the political corruption be eliminated by ITS in IndiaIJ

Yes. First of all, political parties will have no option but to collect funds only through banking system. And any transaction through banking will automatically come under purview of the banking transaction tax. Other political corruptions will also be reduced as corruption is directly and indirectly linked to finance and money. People will slowly distance themselves when they find no favour from political pundits.

 

What will the departments like Central Excise, Income Tax, Service Tax, VAT do thenIJ

The Government has to deploy the existing efficient staffs in other productive sectors and try to accommodate maximum staffs. Inefficient staffs are to be given compulsory retirement. The Government has to abolish the department or cut down the employees to the minimum only to implement and monitor the new regulations effectively. law should be made very stringent for evasion of manufacturing tax and punishment should be exemplary.

 

What are your further prescriptions to implement the new systemIJ

Willpower, strong banking system, amendment of relevant fiscal laws and overall support from MPs are essential to implement the system. We have a very strong banking system and after conversion of post offices into banks, banking system will be available at every nook and corner of the country including the Himalayas. Of course, other aspects of fiscal laws, international laws and international treatise are required to be examined by a research committee to suggest modalities of collection of tax by ITS and ways for smooth transition from the existing system to the new system for implementation in proper spirit.

 

What benefit will people get from ITSIJ

Happiness and happiness only! There will be celebration of tension-free life for one and all. More time for work and creative thinking. A nation like ours will be enriched. This will be visible clearly as no redtapism and no tension of computing, calculating and filing of various returns by all the individual and corporates. Traders will no longer be required to pay and file returns relating to taxes and will devote full time to their business only. Poor people and farmers also will not be worried about anything other than their works. Government employees will not waste working hours equivalent to 15 man-days for calculation, computation, investment and filing of Income Tax. Printing of fake notes, hawala transactions, bribery, theft burglary, looting, rape, murder, cheating will come down substantially and India will become a less corrupt country.

It is the right time to implement an Innovative Taxation System under the dynamic leadership of the innovative Prime Minister Narendra Modi for the happiness, peace, prosperity and betterment of the people of India.

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