Small Savings to be taxed!PPF Hijacked!
Mother India should starve and at the end should shoot her own children shoot down!
We are the people,different layres of haves and have nots divided classes of consumers who tend to fight each other.No politics unites us rather it banks of continuous partition and civil war.
Thus,the Oil Crash benefit has not to be transferred to our pockets and we feel relieved with Prabhuji`s Kripa.
Now,Ram ji would have to show some more sets of kripa and please gear up for the guillotine!
Palash Biswas
Economic survey suggests Tax reform further and it means more tax for the poor to benefit the Munafawasuli economi of Sukhilala so that Mother India should starve and at the end should shoot her own children shoot down.
Railway budget spared us as no hike in fare.Considering the fuel expenditure cut to size and oil prices crashed,the fares should have been halved.It is not.We feel relieved!
The supreme court decided that UID should not be mandatory but you have to lose basic services beside your identity if you fail to link UID.
Every group organized more or less may bargain to have a share in Sukhilala1s sansar.
As those involved in public transport,but the masses stand unorganized, more unorganized than the unorganized workers.
We are the people,different layres of haves and have nots divided classes of consumers who tend to fight each other.Np politics unites us rather it banks of continuous partition and civil war.
We would better die but would never stand united.
Thus,any group may effect price hike at their will.
We have no representation in the governance.
We have no representation in the administration.
We have no representation in the politics.
We have no space for public hearing.
Thus,the Oil Crash benefit has not to be transferred to our pockets and we feel relieved with Prabhuji`s Kripa.
Now,Ram ji would have to show some more sets of kripa and please gear up for the guillotine!
Economic survey suggests to Tax Small savings and finish the subsidy from the root as tax holiday for the effluent is more imminent.Thus,our PPF has to be hijacked!
Nevertheless,the Good Days day dream continues as the Financial managers showcases a great relief for income tax payers without any mercy.
The Economic Survey on Friday said the government should refrain from raising exemption limits on income tax to facilitate natural growth of individual earnings and widen the taxpayers' base, even as it also suggested increasing property tax.
The Economic Survey 2015-16, tabled in Parliament on Friday, also called for a review and phasing out of the tax exemption raj that benefited the richer private sector and a "reasonable" taxation for better-off individuals.
A cross-country comparison shows that India currently has the lowest number of taxpayers, it said, adding that nearly 85 per cent of the economy still remains outside the tax net.
"Just 5.5 per cent of earning individuals are in the tax net and the ratio should be raised to a desirable estimate of about 23 per cent," it said.
Making a study of the data since Independence, the Survey said that the exemption thresholds have been raised much more rapidly than underlying income growth resulting in a widening of wedge between average income and threshold limit.
"One of the low hanging fruit would be to refrain from raising exemption thresholds for the personal income tax, allowing natural growth in income to increase the number of taxpayers. In some ways, this would be reform through inaction," the Survey said.
It said that subsidies amounting to Rs. 1 lakh crore paid to well-off need to be scaled back. Also tax exemptions raj which often amount to redistribution toward the richer private sector will also need to be reviewed and phased out.
"Reasonable taxation of the better-off, regardless of where they got their income from — industry, services, real estate or agriculture — will also help build legitimacy," the Survey added.
It also suggested that property taxation needs to be developed as sparse systematic data on property taxation shows how little attention has been given to this tax.
"Property taxes are especially desirable because they are progressive, buoyant and difficult to evade, since they are imposed on a non-mobile good which can be relatively easily identified," it said.
Making a case for "higher property tax rates", the Economic Survey said it would put sand in the wheels of property speculation.
"Smart cities require smart public finance and a sound property taxation regime is vital to India's urban future," the Survey added.
It said India has not fully translated its democratic vigour into commensurately strong fiscal capacity. "In long run, if India is to stay 'on the line' as its per capita income grows, it will need to build fiscal capacity."
The Survey also said the government's spending priorities must include essential services that all citizens consume: public infrastructure, law and order, less pollution and congestion.
It said the state should prioritise on reducing corruption and government's effort to improve transparency through transparent and efficient auctioning of public assets will help create legitimacy and over time strengthen fiscal capacity.
The Survey said economic development in India lags political development.
"Independent India has averted famines, but chronic malnutrition is still a challenge. The Indian state can organise mega events, but routine safety for women has turned out to be more difficult to achieve. The Indian state responds effectively to floods and tsunamis but finds water and power metering more challenging," it added.
Mind you,under popular tax savings scheme,investors of NPS and insurance pension plans are forced to buy annuity using part of accumulated amount and these annuities are taxed as per the income tax slab applicable at that time.
Thus,the survey suggests that subsidy and tax concessions in railways, power, aviation turbine fuel, gold and kerosene and small saving schemes provide a bounty of about Rs 1 lakh crore to the well off, said Economic Survey 2015-16 on Friday.According to the calculation done by survey, subsidy or tax benefits enjoyed by the rich in LPG is Rs 40,151 crore, in electricity Rs 37,170 crore, PPF Rs 11,900 crore, kerosene Rs 5,501 crore and in gold Rs 4,000 crore.
It said that policies that are based on providing tax incentives in India, benefit not the middle class but those at the very top end of the income distribution.
This is the first time that Economic Survey talks about the benefits reaped by the Super rich through a favourable tax regime, something brought to prominence by well known French economist Thomas Piketty book Capital in the Twenty-First Century and the Occupy Wall Street movement after the financial crisis.
This observation could signal the Modi government's intention to curb these subsidies going to the well off in the future.
The survey said that Indian state's generosity is not restricted to its poorest citizens but in many cases, the beneficiaries are disproportionately the well-off.
According to the calculation done by survey, subsidy or tax benefits enjoyed by the rich in LPG is Rs 40,151 crore, in electricity Rs 37,170 crore, PPF Rs 11,900 crore, kerosene Rs 5,501 crore and in gold Rs 4,000 crore.
The survey said that it is misleading to characterise small savings schemes (National Savings Certificate, tax free bonds and PPF among others) as "small", which offer higher rate of returns and tax incentive.
It said that any tax incentives given for savings doesn't benefit the middle class or the upper middle class but it benefits the super-rich, who represent the top 1-2 per cent of the Indian income distribution. "While in most countries the beneficiaries of tax incentives will range from being middle class to very rich, in India they are the super-rich," the survey said adding that all tax saving schemes should be taxed on maturity.
The Survey also said that while gold is consumed mainly by the rich, it is only taxed at about 1-1.6 per cent (States and Centre combined), compared with tax of about 26 per cent for normal goods (the central government's excise tax on gold is zero compared with 12.5 per cent for normal commodities).
In other words, the survey said there is a huge subsidy of about 25 percentage points (the difference between average tax on other commodities and tax on gold) on gold and about 98 per cent of this subsidy accrues to the better-off.
Similarly, the survey pointed out that ATF is taxed at about 20 per cent (average of tax rates for all states), while diesel and petrol are taxed at about 55 per cent and 61 per cent (as in January 2016). "The real consumers of ATF are those who travel by air, who essentially are the well-off," it said.
Economic Survey 2016: Here Are 10 Must-Know Points
The Economic Survey, tabled in Parliament on Friday three days ahead of budget, called for fiscal prudence and stable inflation, while acknowledging the risks to growth. The flagship document prepared by Chief Economic Adviser Arvind Subramanian termed India as a "haven of stability" and an "outpost of opportunity" amidst gloomy international economic landscape. The Sensex snapped a three-day losing streak, while the rupee and bonds also rallied after the tabling of the Economic Survey.
Here is your 10-point cheat-sheet on the Economic Survey
1) The Economic Survey expects India's GDP to growth at 7-7.75 per cent in FY17, the same pace as in the current fiscal (7.6 per cent); the wide range is on account of external and monsoon uncertainties, the Survey said. India can grow at 8 per cent or higher in next two years, according to the Economic Survey.
2) The government can achieve FY16 fiscal deficit target of 3.9 per cent of GDP, the Survey said. In good news for investors, the Economic Survey argued for adhering to 3.5 per cent fiscal deficit target in FY17. However, the document conceded that FY17 will be challenging from fiscal point of view.
3) The government should review its medium-term fiscal strategy, in view of the 7th Pay Commission salary hike proposal and upcoming recapitalization of banks, the Economic Survey said.
4) Consumer price or retail inflation is seen around 4.5 to 5 per cent in FY17 as against 4.9 per cent between April to January 2016. Inflationary expectations are muted because of the weakness in crude oil prices, the Economic Survey said.
5) India's current account deficit is seen around 1-1.5 per cent of GDP in FY17, the Economic Survey said.
6) The rupee's fair value can be achieved through monetary relaxation, the Survey said. India needs to prepare itself for a major currency readjustment in Asia in wake of a similar adjustment in China. Rupee's gradual depreciation can be allowed if capital inflows are weak, the Economic Survey said.
7) Stretched corporate and bank balance sheets have affected the prospects for reviving private investments, the Survey said. The government should make available Rs 70,000 crore via budgetary allocations during current and succeeding years to banks. By FY19, state-run banks would require around Rs 1.8 lakh crore in fresh capital. Non-financial companies should be sold to infuse capital in state-run banks. Underlying stressed assets in corporate sector must be sold or rehabilitated.
8) Tax exemptions should be phased out and tax base should be widened from current 5.5 per cent of earning individuals to more than 20 per cent. Tax revenue will be higher than budgeted levels in FY16, the Economic Survey said.
9) In order to take advantage of the democratic dividend and meet growing aspirations of those entering the workforce, the economy needs jobs that are good, safe, productive and well paying, the Economic Survey said.
10) The Economic Survey enumerated three downside risks - turmoil in global economy could worsen the outlook of exports, oil prices rise would increase the drag from consumption and the most serious risk is combination of the above two factors.
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