The Finance Ministry’s mandate is to shepherd the economy, boost growth, & galvanize development. However, it has become the enemy of the economy.
In the 1972 Hindi film Amar Prem, Kishore Kumar sings for Rajesh Khanna a popular song Chingari koi bhadke… The last stanza has an interesting thought: mazadhaar mein naiyyaa dole/to maanzee paar lagaaye/maanzee jo naaw dooboye use kaun bachaaye? (If the boat gets into choppy waters, the boatman steers it out of them, but what if the boatman drowns the boat?). The Finance Ministry is behaving like that treacherous boatman.
The Finance Ministry is the preeminent ministry; its mandate is to shepherd the economy, boost growth, and galvanize development. Under Arun Jaitley, however, it has become the enemy of the economy and of the people of India, especially those who vote for his own party; it is doing everything to check economic development. The two latest diktats from FinMin prove, if any proof is needed, that it is determined to torment law-abiding citizens and disrupt normal processes.
The I-T department now threatens salaried taxpayers with action under various penal & prosecution provisions of the Income Tax Act.
The taxman wants banks to pay over Rs 6,000 crore in taxes on the ‘free services’ that they provide to their customers. The very idea of paying tax on something given free is preposterous; taxation is always on some monetary transaction, be it the selling of a good or service, or some income to an individual. How could you ask somebody to pay a tax on an activity from which they themselves have earned nothing?
Consider an anomalous situation: a garment maker announces 50 percent sale on the merchandise he wants to sell so that he could replenish the inventory with new stuff. Would he have to pay tax for the money he got—that is, 50 per cent—from his customers or for the original price, half of which he forewent? The day is not far when taxmen would tax the money spent on charity, shraadh, etc.
Worse, the government intends to collect this tax retrospectively; the target is said to be Rs 40,000 crore. Quite apart from the fact that it would be a huge burden for a sector that is already under great stress, banking, it will intensify the incidence of tax terrorism, which has already reared its ugly head. Under Jaitley’s watch, tax terrorism has been revived.
Further, the income tax (I-T) department now threatens salaried taxpayers with action under various penal and prosecution provisions of the Income Tax Act if they under-report their income or overstate their deductions in assessment year 2018-19. It is also trying to bully the intermediaries like chartered accountants. The threat was issued by the Bengaluru-based central processing centre.
This is despite an estimate made by the I-T department which itself says that an individual salaried taxpayer paid Rs 76,306 on an average in assessment year 2016-17, as against Rs 25,753 by an individual business taxpayer. But the taxman’s sentiment is best expressed in the old Pepsi ad: Yeh dil maange more!
Revenue maximization became the prime, if not the solitary, objective of economic policy way back in 2014.
Come to think of it, most I-T payers vote for the Bharatiya Janata Party; and the party leaves no stone unturned to torment them.
The fact of the matter is that neither Jaitley nor anybody else in the government has any idea what economic policy is (senior BJP leader and Rajya Sabha member Subramanian Swamy rightly describes Jaitley as “illiterate in economics). They are like the deer in headlights—nonplussed and clueless. And when such a thing happens in FinMin, revenue maximization becomes the guiding principle, the taxman the key policy maker, and legal extortion the main accomplishment. As Swamy said in an interview two years ago, they “feel anything that maximizes revenue is okay”.
The consequences are baleful: the law-abiding citizens feel frustrated and cheated (while crooks like Vijay Mallya and Nirav Modi have a gala time), economic development is undermined, investor sentiment goes down, and the business environment gets vitiated.
It needs to be mentioned here that things haven’t got out of hand because of Jaitley’s bad health; they had been deteriorating even when he was functioning normally. Revenue maximization became the prime, if not the solitary, objective of economic policy way back in 2014. The recent diktats by taxmen are but the consequences of that policy objective.
Things are getting bad to worse. Perhaps catharsis lies in making them bad to verse: maanzee jo naaw dooboye use kaun bachaaye…
Note:
1. Text in Blue points to additional data on the topic.
2. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.
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ITS A SHAME OUR WRITERS DON’T GET IT. MR. JEITLEY TAXING TO SAVE WHOLE OF INDIA. THESE WRITERS NEVER WHOTE HOW CONGRESS GOVT WAS LOOTING THE COUNTRY . MR MODI PUTING A NEW FOUNDATION TO ECONOMY BY TAXING NOW TILL ECONOMY GETS OWN STRENGTH .
BJP FAILING BY NOT EXPOSING CONGRESS FULLY AFRAID ROITSA ND MASS KILLING AS CONGRESS HAS FUNDS TO DO ANY HARM TO NATION. GET IT ..
OUR WRITERS SHOULD WRITE HOW CHIDDU DESTROYED INDIAN ECONOMY SYSTEM.
Pl try to tax farmers now. Farmers have had enough of tax exemptions, subsidies, loan waivers and the list goes on. We salaried people are overburdened. Worst still let this government show guts to raise exemption to 5 lacs, only then votes would come.
A very astute article. Maybe fate has to interven to save patriotic citizens from a few arrogant crooks.
Doesnt matter how many articles we write , how many economists advice , how many patriots protest ,
nothing will change . Now its about to complete 5 years full term .We kept on hoping miracles happen.
Modi is Jaitley’s puppet . The control is with Jet lee. Mr singh was far better PM than Modi . Mr singh didnt mislead country !!! He was a honest thief ( with missing tongue) . But Modi is hitech !!! We are foolish people expecting him to become a honest person all of a sudden !!! Swamy should launch his party thats the only hope……..
Except for PC and his son’s scams, there is absolutely no difference between Chidambaram and Jaitley as finance minister. Modi wasted a good 5 years for sure.
Sree Iyer may not notice, but I have been shouting hoarse on this website that Jaitley, Adhia, and their crony tax heads are scaring BJP vote bank relentlessly to curb black money whereas Niravs, Vijays, Lalits etc merrily fleeing country after looting public money. Why these guys are hell bent on displeasing the BJP vote bank of Salaried middle class, SME businessmen, traders etc. Ambanis and Adanis are flourishing at the expense of BJP votebank. Time for Sree Iyer to pay attention to my shouting and get the message conveyed to Modi.
“Why these guys are hell bent on displeasing the BJP vote bank of Salaried middle class, SME businessmen, traders etc. …” – simple. So 2019 Modi will NOT get absolute majority. “Jai Italy” will be the natural PM choice for “whoever” supports BJP at that time. First Modi then India will be screwed beyond repair. All liberal jamaath will be happy ever after.
I really respect team Pgurus for such article..It will aware the Govt. about the blunders they are making..People voted the Govt. to power and there is no way Govt can undermine them..This criticism is really really healthy and it will be benefited for both the Govt. as well as the citizens of this nation..Earlier PGurus had also written articles that warned the Govt. about their “wrong turn” and quite successfully the article made huge impact in the Govt. circle..Hope the Govt. see this article and try to learn something from this..Thank you team PGurus..
The author knows way way better than me and I really respect his arguments and the govt must not harass the salaried employees and govt must find another way to increase tax.But there is one argument the author put forwarded which I really don’t agree with..”Tax evading is corruption”,So there is nothing wrong if a govt. warn people to not under report their income or overstate their deductions in year 2018-2019..You need to understand that there are a lot of people who are being really honest with paying taxes and there is no way you can give a free hand to those people who are evading tax..So I don’t think there is anything wrong if Govt. go on to sue people who were found under report their income or overstate their deduction..But I do agree that you must find proper way to reach a conclusion that otherwise no one but the citizens of this nation will be harassed and very soon tax terrorism will be a huge reality..
Arun Jaitley is best finance minister India has had,besides being No 1 parliamentarian. Ignore this paltry journo
Haha, 3 examples to prove you wrong…
1. OROP turned out to be embarrassment rather than credit for Modi govt, thanks to Finance ministry babus of Jaitley
2. Worst handling of demonetization
3. GST implementation blunders
The present government is relying too much on service tax. They have already brought every service under service tax. Now the present GST replacing service tax is a cruel blow on the public. Almost all services are being charged GST @18%. This is grossly unfair. GST @18% on telephones, banking and insurance services, examination & application fee for the unemployed and on all govt. services is a very heavy burden on the public. The service tax started @8% on a few services but now is 18% on all services. Nothing short of loot by government. In fact there is no justification of 18% GST on services of any kind. The slab of 18% may be justified only on manufactured items where excise duty is merged with other taxes. In case of services, the tax has been raised from 8% to 10% to 12% to 15% and now 18% GST. It is breaking the backbone of poor & middle class consumers who have no means to claim credit for tax paid on inward services. The govt. must bring it down to 12%. I request PGURUS to take up the issue forcefully with appropriate research and reasoning.
There will be an in-depth analysis of what should be the correct GST value in the near future. Stay tuned.
Namo should get rid of AJ , the earlier the better
There appears to be a very strong hold on BJP to retain Arun Jaitley and it appears that a foreign hand is exerting a strong influence through local netas and babus that makes it difficult for Modi to maneuver his government with complete flexibility. A new mandate for Modi with a stronger presence is the answer but would the anti-Modi forces allow that to happen? Might be Dr. Swamy could be the saviour.
Is he the Congi mole?
I do suspect. All his actions support congress. AJ is a protector of Chidambaram. All these people Chidambaram. Singhvi, Arun Jaitley, Sibil and other are all colleagues in “BAR”
I can understand why the government wishes to tax the banks on “free services”. The belief is that banks are earning an income elsewhere as a result of those so-called free services. Umless banks are going overboard with the free services, we should not tax free services. I admit, the government knows much more than I do and I hope they are very good and wise people. I do not appreciate the salaried being hassled. The focus should be the businessmen and expanding the tax net ..
I am also a salaried person. Why should a person worry if one is not doing anything wrong?
What is the threat? Even if people pay taxes honestly, government will take action?
Not expected such language from PGURUS. Day by day you are depreciating values.