Imagine how good it is if Income Tax is abolished in India? No tax means more money to every individual. You must be thinking is it a joke or what? Well, it is not a joke. No income tax in India is expected to be Modi’s next move. After demonetization of old high denomination notes, the government is expected to roll out next economic reforms and No Income tax could be one of them. Let’s discuss how this dream can be turned into reality.
No Income Tax in India is Modis next move
In order to make India “Sone Ki Chidiya” (golden bird) again Shri Narendra Modi has started a fight against black money and corruption. Recalling high denomination currency of Rs.1000 and Rs.500 was the first step towards that. This step was in accordance with reviving Indian Economy – Arthakranti Proposal.
The ArthaKranti proposal is a well-researched scientific approach designed to completely transform the current Indian socio-economic scenario.
“Arthakranti Proposal” has been given by a Pune (Maharashtra) based “Arthakranti Sansthan” which is an Economic Advisory body constituted by a group of Chartered Accountants and Engineers. This funda has been patented by the Sansthan. The government is planning to execute this proposal in two parts.
Also Read – 25 Types of Taxes in India
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.
It is claimed that if economic reforms mentioned in Part A and Part B is successfully implemented India, India will be like USA. The government has already started implementing part A. It is expected that by 30th December, 2016 around 15 Lakh Cr old high denomination notes will be deposited into various banks.
Also Read – Top ways to save Income tax
From the year 2017 implementation of Part B will commence. In the new year 2017 bank will have enough cash on hand hence saving bank interest rate will be reduced from 4% to 2%. In addition to that fixed deposit, rates will be reduced to 5% -7%.
Home loan and car loan interest rate will be reduced to 7% to 8%. The reduction in a home loan interest rate will straight away benefit real estate sector and affordable housing scheme project. The price of real estate will reduce and will be affordable to common man.
By September 2017 the government will introduce GST reforms where all tax will be replaced by single tax system called as GST. In addition to the introduction of GST, it is expected that corporate tax rate will be reduced to 30%.
Once all these steps will be executed Prime Minister Narendra Modi will give a gift to Indians by removing Income Tax. Income of every individual in India will be income tax-free then onwards. No Income Tax will be the biggest gift ever by any prime minister in the history of India.
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 nonbanking transaction.
It is expected that implementation of above steps will give following benefits.
Also Read – India Taxes and life of common man
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
It is indeed a very good concept. If it is implemented effectively India will surely become a global economy with a competitive edge.
As of now, no confirmation is received on the removal of income tax and implementation of banking transaction tax. However, it is indicative that Modi government will take steps suggested above after demonetization move.
Do you think demonetization of the old high denomination is correct step by Modi Government?
Do you think ArthKranti proposal will be beneficial to our country?
I support the initiative of Modi government. If you support this initiative do share this post with others on facebook and twitter.
Hope about dreaming zero tax India will become reality soon.
ivan sequeira
I’m not sure its gonna happen or not. Raviraj Sir, Its a fantastic article to read.
Sreenivas
Definitely a great move if that really happens..most of the salaried ppl money goes into taxes and if they get that back,they can help the economy to take it to the next level.
Kitu
Typos corrected.
Hi !
Sounds good at first. But small income group people will also have to pay transaction tax … as I can understand after reading this.
This will be unfair. Higher income people must pay higher amount to govt. And below taxable range people as of now.. like 1.5 lack/ an. Male as 2.5 lack/ an. (Finantial year 2016-2017) deserve exemption. CZ it’s really small amount, nothing can be done with it like household mgt etc.
So, I think we deserve right clauses under this big shot >> No income tax.
***?? MH12 Rocks !! AM a proud Punekar ! ?
JayaKrishnan Alambath
If Bank Transaction Tax is to be introduced then why GST?
If big denomination notes of Rs.500 and Rs.1000 are abolished then why re-introduce new Rs.500 and Rs.2000 notes?
Why was cash transactions above a certain limit not banned?
How can you call this Arthakranti?.
Dr. Jawahar Lal bansal
Dear Raviraj,If saving bank and FD interest is drastically reduced,where to invest surplus white money-in mutual funds or gold. Kindly reply.
Raviraj Parekh
Dear Sir,
Mutual fund and equity will be best way to invest surplus money.
shiva
Hi,
Plan A can implement easly just exchanging the Currency ,
Plan B can’t implement in India,
When doing the business as such a big country not every can use the bank transaction, , AS of now after Plan A implementation people looked out the loopholes few alternative ways to convert Black money into white based on Percentage… only can avoid certain extension….
without Income-tax country can’t survive… based on my experience lets wait and see….
suresh
sir
Each and Every purchases including very very small shops introduction of vat bills should be implemented….
some people taking good salaries ans not coming under income tax that should be totally avoidable and introduction of transition throughly bank must be made………but it is india all i can say……very very long way to go…….but still iam proud to be an indian……and about no income tax if its happen its wel come and obviously our country should grow and compititive with others developing countries…….
thank u sir
Mani Sriram
In principle you are correct. However I do feel everyone should also pay tax as per his capacity and demand as a right the services from govt. So the Bank transaction tax percentage could be based upon the cumulative total volume of bank transaction performed within a period, say within a month, or quarter. In that way, some sort of justice will be done, where the lower income group who will be doing lower volume of transactions will be paying lesser percentage, while the higher income group will pay higher tax.
sanjiv verma
If the high denomination currency notes like Rs. 2000 and Rs 500 can have a validity date printed on them say 7 years from month of issue (i.e a currency note printed in november 2016 will be valid till november 2023) . After this validity period , the note has to be exchanged in a bank or post office . This will stop hoarding and RBI will have better check on currency issued . Also use of debit , credit cards and e-wallets will increase . Black money economy may also disappear!
Nagarajan
When banking transaction tax introduced for all transactions what is the necessity of GST. It amounts to double taxation. Abolish all form of tax .
Bhumi Halder
Hi,
I too support the initiative of Modi government. And, I have noticed the positive effects of demonetisation as well,. Due to demonetisation:
1. Terrorists in Kashmir have become Handicap
2. No internal riots/rampage to oppose any move as it was very common before Nov.08, 2016
3. Almost No bribing
4. Fake currency and black money world is almost disappeared.
5. Fresh currency is in circulation
6. An opportunity for everyone to be on the same platform with different wallet size as per individual’s capability.
But, at the same time, I wish, if Govt.would have planned this all in a little better and technical way, then, this move could have been smoother.
I am waiting for more from Modi Government towards betterment of India.
Finance Thinktank
If lower income group need to pay tax then the necessary infrastructure should be made available for them so that their livelihood is not disturbed
Pradeep
If the govt wants to encourage people to go cashless and use digital banking, then introducing banking transaction tax will be the biggest turn off. Why would I keep my money in the banks and pay 7% tax to make online transfers?
I would rather pay by cash which I guess would be cheaper for the shops who will then offer discounts and then black money comes back. In a largely cash based economy, banking transaction tax will not work.
The better idea is to widen the tax base and increase tax slabs so that middle income earners get some relief. Current demonitization will help govt identify the big earners who doesn’t pay taxes now and they should go after them year after year to make them pay taxes.
As nicely as it sounds, India has only 2-3% taxpayers, so abolishing income tax will not bring too many game changing votes to Modi. So its unlikely to happen.
abdul
hey !
as far as i think its based on the transaction value of the amount for eg: if i have a transaction of 1 lakh and say transaction tax came upto 4000 but the other guy who made a transaction of 10 lakh would have to pay 40000 transaction tax , which make sense and wont gulp the money from poor
Samsuddin Ahmed
The lower income group people should completely be exempted from any kind of taxes.
Diksha
I haven’t seen corrupt people struggling for survival in the queues. Salaried people were the ones who didn’t have cash flow and suffered a lot. All this struggle would be worth it if Modi sir introduces such a system. All the rich people aren’t corrupt or heirs of kingdoms so you really can’t put a man who works 18 hours a day in equality with a man who takes lunch break , sleeps for 8 hours and watches movies. All the taxes are for providing justice , life and subsidies to our fellow individuals. There’s nothing wrong if they pay 2% BTT as they get 200% in return. So that the system doesn’t look biased towards a certain financial group. Respect all , all pay tax. And who needs the most , gets the most out of it. Fair.
Sanket Shirodkar
This ArthKranti model is not full proof
They are assuming all bank transactions are of commercial type; what if I wants to pay money as
1. Pocket money to children’s
2. Household expense to spouse
3. Monthly payouts to parents
4. Financial help to friends/ relatives if they need money
As per proposal bank will deduct Bank Transaction Tax for this transactions also. Which is unfair.
And height is my money will deducted twice in case of point 4 when my friends/relatives will return my money.
Useless proposal I would say…….
Konduru raghu
When GST is paid on all expense then why tax on Income So it is better to abolish Modiji
GB
Very ambitious and I sincerely hope modi scraps at least few other taxes if not IT. But I doubt it given jetly’s conservative 2016 budget which in no way passed on the huge advantage the crashed oil prices offered our nation.
Vikas
After Suffering cash crunches, I realized that there’re 2 groups. The one who lives on Salary and another group who do business….The businessman still have the cash flow to survive and he doesn’t need to stand in long Q and wait for money while another group (which I feel and witnessed) depends on ATMs and banks. This group pays taxes and now their life has became a Hell. B’coz, ATMs are out of cash and Bank are unable to provide cash to everyone standing in Q..
Sd
Many old people keep their savings in FD and draw monthly income. What will happen to them when health system is so poor in govt hospitals. Why no plan to make health and school education free of cost? All private schools are money minded. Govt hospitals are in bad shapes.
K VENKATESWARLU
Dear Raviraj & all,
Though the above idea is very good I doubt very much about its effective implementation. We Indians are very fond of cash & gold. Most of educated Indians also feel that usage of Banking system and digital cashless systems are tedious and prefer to deal with cash only. Further, for such a thing to happen the number of bank branches should increase tremendously from the present number. Without first taking number of steps in that direction, straight away implementation of BTT may not fetch the envisaged outcome.
There is one more problem. Most of the people have deposited money (demonetized currency) in banks because of compulsion. Hence the increase in bank deposits. Once adequate new notes are available, those who have deposited will withdraw those sums from the banks and keep them in almirahs, lockers and under the mattresses.! That way banks will not have enough deposits to reduce interest rates etc.
So the dream of No Income Tax regime will be possible only if new currency is not made available to the public and only if Modiji continuous with next step with steadfastness and determination!
R. HEMANTH KUMAR
Move taken by Mr.Narendra Modi to abolish Income Tax seems to be good. If it materialises the salaried people will benefit a lot.
Mashipa
I guess petrol price, commodity price will go down, education cost for children will go down. banks are there to give financial help to individual. Again its pride for children that they are giving taxes and contributing to nation. your logic seems to be selfish and not to overall Society.
Manjit
If Mr. Narendra Modi continues as our PM then SENSEX will surly cross 75000 in coming years may be by 2020. So invest in equity directly or indirectly.
RAGHAVENDRA
There are only 24 lakh people in India who accept that their annual income is more than 10 lakh rupees. we can’t digest this. Look at the big bungalows and big cars around us. We do feel, that for the good of the country, this movement for honesty, needs to be further strengthened.
Our dear respected prime ministerji should bring the New Banking Transactions TAX this year only.
Let the Small income people pay less i.e 1%
Big income people pay more i.e 2%
prem
it is very bad idea because farmamers are going to loose thier money in the form of tax irrespective of the amount spent in the form expenditure, they have to pay on the total amount what they get. one year farmamer will get income in the next year they may not get income and also they have to get loans at higher interest rate. so my strong suggestion is totally exepmpt agricultural income because the farmamers are back bone of india let’s support in all forms. we have seen several times in the news that farmamers are committing sucide because of debts and lack of rains , lack of price their crop. Let’s support farmamers.. thankin you.
Rajesh
This idea is really good..the only question I have is….when there is transaction tax for each transactions..there will be double tax for money in bank account for sure, right?….lets say….there will be tax on salary when it’s credited to the account and then again on the same amount tax will be imposed when this is transferred to another account…If I understood correctly there will be a slab rate based on the amount….and if I am on higher slab rate amount, which is 7 % as per this article…whether we end up pay more than what we pay as tax if the same money is transacted above certain 5 times? At present we pay a tax maximum of 30% where as it may go above 30% based on the number of transactions….
RAJESH MENON
I feel this is a bad idea! Remember, FD rates and SB rates are down to nothing , which means people, irrespective of their economic status will be forced to invest in other instruments like shares and mutual funds both of which are very risky. A very bad move. No income and banking transaction tax + GST
N.R
Please think this…….Always and everywhere the plannings are at their best but how will you stop these leaders administration and economy from corruption. Out of these taxes revenues etc Only 10percent is sufficient for whole economic developments welfare and all… Only we need honesty everywher.
We Indians are not honest in everything you can’t deny… Checkout yourself…we need to change individually FOR A BIG CHANGE. Please make a positive change in yourself.
vignesh
Hey,
Tax based on the transaction is good, But how does it work when technology like blockchain coming into existence. How do you see govt trying to regulate the cryptocurrency in India?
Adv. Shailesh G
I may add that population tax has to be added to control excess population with I’ll motive and it may also help to standard of living , better growth and controlling on corruption, illegality and inhumanity & immorality.