Since almost a month now, there are section of people from political parties, media and so called intellects who are spreading false information about demonetization and creating panic in the public.

These people who are hot by demonetization have started spreading rumors that Indian economy will se a steep downfall following the note ban. They gave several interviews to main stream media and writing columns in leading Indian newspapers saying demonetization will not help curb black money but will slow down the economy of the country.

But the fact is most of these people who have projected a downfall are the same opponents who malign India on global platform and want Modi’s policies to fail so they can earn their livelihood.

The United Nations conducted a study on the present economic situation and how demonetization will help the country. The report suggested that India is projected to grow at 7.6% in the year 2017 as infrastructure development is on the rise and manufacturing sector will gain momentum. It also said India and China are the only two countries that have stable economy in Asia Pacific.

Social Survey for Asia and the Pacific 2016 of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) reported that India’s economy has been very stable in the financial year 2016-17 and would continue the trend in the successive year. The ongoing structural reforms although may temporarily cause inconvenience, will benefit the economy in the long run.

The reforms are also set to boost investment in the private sector which will bring in more entrepreneurs and starts ups. Although the growth in the first quarter April-June 2016 was moderate due to contraction in fixed investment, but a rebound is expected very soon said the UN report.

The government which is stressing on ‘Make In India’ and ‘Start Up India’ should focus on tax reforms. The tax benefits would play a major role in bringing in investments and start-ups. India which is now transforming into a cashless society needs a overall transformation of banking system.

Anil Bokil who suggested the demonetization reforms had also put forth tax reforms and how scrapping income tax would benefit the Indian economy.

The proposal includes:

  1. Scrapping all 56 different taxes including the painful Income Tax, except import duty.
  2. Scrapping all currency notes with denominations like 1000, 500 and even 100.
  3. All heavy amount transaction must be made only through DD, cheque, online or electronic banking system.
  4. The maximum amount of cash transaction should be fixed.
  5. The government should introduce single point taxation system through banking system (transaction tax from 2% to 0.7%).

WHY ARE THESE IMPORTANT

According to statistical report, in India accounts over2.7 Lakh transactions per day and 800 crores annually. But less than 20% of the transaction takes place through banking system and another 80% of transactions is made through cash which is totally un traceable. According to a survey, the Indian population spends on an average of Rs 20 to Rs 50/day, so why do we need a Rs 1000 note?

So what implication will the society have if all 56 Taxes are scrapped??

  1. Consider an official or a salaried person, he would definitely bring home more money, which will increase his capacity of spending and investments.
  2. All commodity rates would drastically reduce, especially petrol and diesel will be reduced by 35-52% which will reduce the petrol prices to Rs 25-30/lt.
  3. There will be no option for tax evasion, so there will be no question of black money generation.
  4. Business sector, start-ups and entrepreneur sector will be boosted and people would invest generously in business.

Banning High Denomination Currency Notes

  1. Using cash for high amount transaction will be completely stopped.
  2. There will be no chance for black money generation since no one would have the time and patience to pay huge money in 10s and 20s.
  3. The main reason behind the skyrocketing prices of properties is the black money market. Jewellery, land, house are all bought using black money in cash. So banning high denomination notes will reduce the prices by more than half. People will not be able to buy property for high value showing low registry prices.
  4. Terrorists who receive huge funds through cash will be stopped. Kidnapping for money, harassment, bribery will all be stopped.
  5. Circulation of fake currency will be stopped, as fake currency printing for low value notes is not feasible.

Is Modi Planning to Scrap the Income Tax Completely??


Aishwarya S

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