Considering the fact that Prime Minister Narendra Modi is making drastic changes in the banking system, chances are there the Income Tax will be a thing of the past. There are rumours that government is also mulling the idea of replacing existing taxation mechanism with the Banking Transaction Tax (BTT). This is one of the proposal floated by the Pune-based think-tank Arthakranti, who is claiming credit for the drastic decision of demonetisation.
Arthakranti first presented the idea of abolishing all taxes, including the income tax, and replacing it with one single tax on banking transactions in 1999. In the run-up to 2014 Lok Sabha elections, Arthakranti reached out to leaders of BJP with their economic game plan to eradicate black money.
A banking transaction tax is a tax levied on electronic transactions on bank accounts. Arthakranti has proposed a taxation rate of 2 per cent on all forms of banking transactions. The tax would be charged on both – cheque payments and electronic methods of transactions. The tax would be collected by government and equally distributed between Centre and the respective state where transaction took place. The BTT as proposed by Arthakranti aims to abolish all other forms of taxes, except customs on imports.
The proposal proposes to scrap all currency denominations above Rs 50, which will force all players in the market to switch to electronic methods of transaction. The tax would be deducted straightaway with every transaction at a nominal rate of 2 per cent. Thus, the scope of hoarding wealth in form of cash and evading taxes through the loopholes in Income Tax would be avoided.
Also read 5-Point Plan To Revolutionalise India by Arthakranti Sansthan
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