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  • Category: Miscellaneous

    Is it possible to eliminate black money without reducing tax rates?

    Higher tax rate is the main reason for generating black money in any Economy. We know that tax rates in India are comparatively higher. People and companies pay the tax properly only when tax rates are lower. Government of India is taking many measures to eliminate black money in our country. Taxmen are running behind tax evaders. Government is asking people to do cashless transactions. 1 percent tax is imposed when we do cash based purchase of goods and services worth more than Rs. 2 lakhs. Is it possible to eliminate black money in India with such measures without reducing tax rates?
  • #576571
    As far as I can foresee, it is not possible to eliminate black money totally as the whole system is corrupt. Even after reducing the taxes, most of the businessmen will not volunteer to pay income tax as they know very well that the tax rates once lowered can be increased any time. Once they come in the Government net of taxpayers they will have to pay even when the taxes will be enhanced later.

    The real profit in businesses come from the evasion of taxes only. From the business point of view, most of the traders see no logic in unnecessarily paying a chunk of their hard-earned profit to the Government in the form of taxes. The usual profit margin which is generally available for businessmen is peanuts compared to what they can earn simply by paying a fraction of it to the enforcing authorities.

    The manufacturers also earn the bulk of their profits only through tax management for which they employ intelligent CAs who primarily act as tax consultants only.

    Let us encourage each other in sharing knowledge.

  • #576577
    If everyone pays the tax, then tax rate will automatically get reduce. Taxes are increasing due to improper tax payments by us and affording black money and black business. When we're purchasing anything directly from store without any bills, it means doing a black business. The proper tax didn't go to the government fund; so directly we're making our country poor and indebt. If we pay regular tax for a year, then there will be no any kind of scarcities in our country. Black money is just a direct robbery from our country as Mughals and British did during their ruling.
    Regards,
    Naresh Kumar
    'Every bad situation will have something positive. Even a dead clock shows correct time twice a day.'

  • #576754
    Considering the current situation in India, it is almost impossible to eliminate black money. Even if the tax rates are reduced, we can't eliminate black money. Suppose a person should pay Rs. 1,00,000 as tax but not paying it i.e. owning black money. If the tax rates are reduced by half, he/she may think that Rs. 50,000 can be saved and won't pay tax again. In my opinion, black money can be reduced (not eliminated) if strict laws are implemented and the people owning black money are severely punished. But, that won't happen.


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