Black money scam

By,
Pankaj

Transaction taxes are the worst kind of taxes. GST is a much superior tax. income taxes are somewhere in between. transaction taxes are like reducing the grease in a machine that needs to be well oiled. it simply shrinks the whole economy.those who advocate transaction taxes havent thought it through. transaction taxes dont raise much money at all, but reduce the overall number of transactions. if you dont believe it, look at STT numbers by Chidambaram or the effect of 5 pence on plastic bags -transactions reduce by 85%!It is a friction. If applied for currency dealings it is a deterrent for people to use bank transactions. As well advertised Indian people look for mileage of vehicle even if vehicle is costly. Hence if cash transaction through banks are taxed people will go for cheques and cashless methods.

               Till now there has been no formal articulation about the benefit of currency ban. We have only one speech by PM which was centred about fulfilling his promise about black money. His supporters or would be supporter have added many benefits ranging from cashless economy to price correction in real estate. Whether these fancy benefits were pre thought by the government or is an output of sycophancy is equally probable.

                  It is hard to be convinced about any economic benefit as of now. However, the political ramifications are clear. This move will surely kill regional parties who get a good share of their donation from informal sector in cash. Hence, every regional party will some one Amar Singh now to get access to super rich who can pay in formal ways.

                  This is interesting aspect of the exercise. IT department is now intelligent than before going by notice they are sending to common citizens based on past years it returns. With the technology support of big data and machine learning they teach the computer to identify potential scenarios or pattern of bank credits which can be likely candidates for tax evasion. The technology call supervised machine learning can help it department without much effort in identifiying tax evasion scenarios. As regards to capacity I they will thro the burden on the citizen to explain the sources if it does not match with it returns. There IT department are kind of free for other work. The difficult part is enforcement this can go long as appeal and re-appeal can lengthen realising the tax collection from the defaulter. 

The core part is IT department reliance on Digital technology which PM is often mentioning will be used to automated most of IT work.

When I spoke to bank official they said that when credit above 2.5lack happens automatically the message is sent to IT department the bank need not compile the data. If bank balance rises suddenly for 0 to 2.5lack a message will be send to IT department. These records which IT department sends are available as critical information in database which will scanned using computer algorithms to help IT officials to pick and choose the depositor and ask him to submit IT return if he has not submitted. If a return is already submitted it will matched with return and reason judgement about black money will be arrived.