Tuesday, February 14, 2012

the Indian middle class, Tax Savings and Black Money


Come March, the salaried Indian middle class is under a different stress ! – Employers would be deducting tax at source; most have had declared that they would save some x amount, trying to have some IT exemption – now finding that they have to save; besides the Life Insurance, Medical Polices etc., ventured mostly for tax saving are also due this month…. So little salary for other household expenses.. some even resort to pledging their NSCs and the like for investing afresh in NSCs – paradoxical – borrowing to save !!!

But that is a small % of Indians – there is another microscopic small % which actually owns huge money but for them, these taxes mean nothing or so it appears.  Black Money is a pet theme in Kollywood and is good see the Hero speaking or plotting on bringing back them to our shores by putting ingenuous pressure on those owning such money !. Kandasamy, Sivaji – the Boss and more  - all Super hits…..

One no longer is startled by reports quoting the CBI Director  that  Indians are the largest depositors in banks abroad with an estimated 500 billion US dollars (nearly Rs 24.5 lakh crore) of illegal money stashed by them in tax havens, such as Mauritius, Switzerland, Lichtenstein, British Virgin islands etc.  These remarks were aired at the inauguration of first interpol global programme on anti-corruption and asset recovery and hence sound authentic.   Speaking there, the CBI director stated that getting information about such illegal transactions is a time taking process as investigators have to peel each layer by sending judicial requests to the country where such deposits have been made.  He also spoke of lack of political will in the leading tax haven states to part with the information because they are aware of the extent to which their economies have become “geared to this flow of illegal capitals from the poorer countries.”  Perhaps Mr Singh consciously did not touch on the ‘political will’ of India to pursue, bring perpetrators to book and recover such money !!.   There would certainly be impediments but this is an area which requires concerted serious efforts from the Government.  His talk actually takes out the fizz as he speaks of the gainers taking money to Dubai / Singapore / Mauritius and thence to Switzerland or other tax heavens making recovery much more difficult. 

A report in First Post quoting Economic Times gives a totally new dimension to it by reporting that Income tax department has secured at least 17 “voluntary disclosures” from around 700 Indians who are alleged to have had secret accounts with the HSBC Bank in Switzerland.  The amount reportedly ranges from Rs 50 crore to Rs 300 crore. This is the procedure of filing  ‘revised return’   amending their original returns.  So, does that mean that they would go unharmed and would only have to pay some tax on their illgotten money ?  Is this not a travesty or justice ??  -  and who are they Politicians and some elected representatives at that !!!!

Is not such a measure a shame and cheating of honest citizens ?  For ordinary, there is need for disclosing their source, pay tax on income, on interest and on whatever legal ways one can earn but for the ill-gotten, a red carpet welcome of accepting whatever they state !!  Somehow, Govt tries to maintain that the names or the data  obtained under double taxation treaties cannot be revealed.  Then there is talk of not in a position to verify the stolen data.   Keeping the doors ajar for people to walk away not slip away.  Lack of man power is also cited – would the same logic apply and will Govt not arrest killers at all if the police force is not enough and if jails are fully occupied !!

The stashed money is not a tax issue alone.  It is ill-gotten, cheating and depriving others of their money and earned through illegal corrupt means and should there not be any punishment for such devious methods of earning.  Instead should they be accorded a grand welcome and allowed to go scot-free.  How much of this money would have reached the hands of terrorists out to destroy the fabric of the Nation and destroy the Nation ?   Hassan Ali Khan reportedly was called upon to pay 72000 crores of tax and if this is the demand, how much was the earning ?  Just imagine…..

Once in while, we read reports that the Govt has the names and list but no disclosure would ever be made.  We have read in our History books that Mohammadean Invaders plundered India and then British East India Company took our wealth.  Is the present batch of plunderers anyway different – why no action against them and why are they given all respect ??  Why keep their names under wraps ?? 

Julian Assange, of Wiki leaks indicated many and stated many banks entertain customers only with a minimum of Rs 5 crore in assets.  We will fight for Salman Rushdie and Taslima, but did  we ever fight for Assange and providing him safety in our land, which perhaps might benefit us in a very big way.     The illegal money is not a tax issue it is a criminal mistake and perpetrators must be punished in the most harsh way.  If only such monies are available, India could become a wealthy economy.

Budget after Budget, we would wait hours to hear FM speaking of tax concessions to working commoner, which in effect would provide a few thousands of tax relief – but in between gets away crore earners who evade tax, stash their wealth and harm the National interests..

So we read about scams and more scams – occasionally fall in the trap and get arrested and might even reside in jail for few months. But nothing would change after that.  Govt does not have the intention or will to bring out the ill-gotten gains and generations of corrupt people are going to enjoy that.  Meantime, the common man would stand foolishly in the long Queue before the Petrol station to fill up his scooter with 15 litres of petrol, thus trying to hedge against any increase – say Rs.3 per litre……  Long live democracy,  Indian middle class and their petty mindedness


With regards – S. Sampathkumar.

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