{"id":6328,"date":"2020-02-15T17:48:33","date_gmt":"2020-02-15T12:18:33","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=6328"},"modified":"2020-02-15T17:48:33","modified_gmt":"2020-02-15T12:18:33","slug":"indian-economy-and-issues-relating-to-mobilization-of-resources","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/indian-economy-and-issues-relating-to-mobilization-of-resources\/","title":{"rendered":"Indian Economy and issues relating to mobilization of resources"},"content":{"rendered":"<p><span style=\"color: #0000ff;\"><strong>Relevance: Mains: G.S paper III: Indian economy<\/strong><\/span><\/p>\n<p><strong>Context:<\/strong><\/p>\n<ul>\n<li>The norm for Budget presentations to wax eloquent about the government\u2019s commitment to easing the compliance burden for honest taxpayers and its keenness to promote \u2018ease of living\u2019 and \u2018ease of doing business\u2019.<br \/>\n\u2022 But the fine print in the accompanying Finance Bill usually has the opposite effect \u2014 of making life infinitely more complicated for the taxpayer.<\/li>\n<\/ul>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Liberalised-Remittance-Scheme-LRS.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6330\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Liberalised-Remittance-Scheme-LRS.png\" alt=\"\" width=\"1010\" height=\"854\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Liberalised-Remittance-Scheme-LRS.png 1010w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Liberalised-Remittance-Scheme-LRS-150x127.png 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Liberalised-Remittance-Scheme-LRS-300x254.png 300w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Liberalised-Remittance-Scheme-LRS-768x649.png 768w\" sizes=\"auto, (max-width: 1010px) 100vw, 1010px\" \/><\/a><\/p>\n<p><strong>Liberalised Remittance Scheme:<\/strong><\/p>\n<ul>\n<li>A good instance of this in the latest Budget is the decision to impose Tax Collection at Source (TCS) on remittances under RBI\u2019s Liberalised Remittance Scheme (LRS).<br \/>\n\u2022 From April 1, the Centre has required all authorised foreign exchange dealers who remit sums in excess of \u20b97 lakh under LRS and sellers of overseas tours packages, to collect a 5 per cent TCS from the spender, to deposit with the taxman.<br \/>\n\u2022 While the stated intent of this is to widen the tax base, it imposes an unnecessary compliance burden on individuals for legitimate transactions that are not even liable to tax.<\/li>\n<\/ul>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Economy.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6329\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Economy.png\" alt=\"\" width=\"601\" height=\"532\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Economy.png 601w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Economy-150x133.png 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/Economy-300x266.png 300w\" sizes=\"auto, (max-width: 601px) 100vw, 601px\" \/><\/a><\/p>\n<p><strong>Impact of Tax Collection at Source:<\/strong><\/p>\n<ul>\n<li>Initially introduced to pin down high-value car and jewellery purchases funded by hard cash, the TCS levy has lately spread its tentacles to cover a wide range of unrelated transactions that the taxman suspects are conduits for evasion, even if routed through banking channels.<br \/>\n\u2022 Apart from LRS, TCS provisions now apply to the sale of alcohol, timber, minerals, scrap and vehicles exceeding \u20b910 lakh in value for \u2018trading purposes\u2019 and even sale of goods of value exceeding \u20b950 lakh.<br \/>\n\u2022 The new TCS on LRS will cause undue hardship not only for Indians undertaking one-off capital transactions overseas, but also for tourists in transit in India and parents with wards pursuing overseas education, who need to frequently remit living expenses and fees.<br \/>\n\u2022 The Centre\u2019s view seems to be that TCS isn\u2019t a burden given that the remitter can claim credit for it when he files his annual tax return, there\u2019s really no good reason why an individual must lock up his cash flows with the tax department for months on end, for a transaction that isn\u2019t even liable to tax.<br \/>\n\u2022 Given that LRS remittances can only be routed through authorised banks and require documentation, it is unclear why the tax administration cannot collect this information from authorised dealers and match it with individual tax returns to identify evaders.<\/li>\n<\/ul>\n<p><strong>Way forward:<\/strong><\/p>\n<ul>\n<li>Instead of sweeping more items under TCS or TDS, the Centre needs to ask why the tax administration needs to be spoon-fed so much new data by the taxpayer, when it is already collecting truckloads of information from TDS filings, Annual Information Returns and a host of new disclosures demanded in the IT returns each year.<br \/>\n\u2022 With the tax database now carrying details of both the PAN and Aadhaar numbers of taxpayers and GST returns available to cross-verify data, the Indian tax administration should be able to rely on in-house data mining and artificial intelligence capabilities to track down evasion without resorting to blunt instruments such as TCS.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance: Mains: G.S paper III: Indian economy Context: The norm for Budget presentations to wax eloquent about the government\u2019s commitment<\/p>\n","protected":false},"author":1,"featured_media":3299,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[123,42,43],"tags":[392],"class_list":["post-6328","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-indian-economy","tag-union-public-service-commission-upsc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/6328","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=6328"}],"version-history":[{"count":1,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/6328\/revisions"}],"predecessor-version":[{"id":6331,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/6328\/revisions\/6331"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/3299"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=6328"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=6328"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=6328"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}