prasen9 wrote: ↑
Mon Sep 04, 2017 7:18 am
And, yes, even after there was enough currency notes, I have heard of some people refusing to give the money back and succeeding to keep it. I have also heard of people being "taken care of" (beaten up etc.) by the rich (think thakur-type people) if they did not return that money. And, I have also heard of these people going to the police and slipping the police a reasonable note to get them harass the launderer about how they got the money in their account or threatening to do so (most middle-class people can find some relative who works in some police department who can make a call to the local police department). In most of these cases, they got their money back. So, it is not that easy to figure out who really had how much leverage. Certainly the poor had some leverage. Admittedly, these are anecdotes from my dad and a friend.
Terrific. So, you have more info on this than I do. I was mostly guessing in what I said (and had predicted way back at the demonetization time). Looks like exactly that is happening.
Basically, we are arguing what the cut was and whether this cut was significant enough to cause an increase in the revenues. How does the tax on these cuts compare to what the government would have gotten by an amnesty scheme at a low-enough tax rate?
The point is that you cannot give any amnesty in income tax without the standard tax rate and at least a minimal penalty. No adding too much penalty is all yo can do. That would still bring it to some 40%. Anything else would be very unfair to those who actually pay honest tax, and they will not take kindly to it. The government would get roasted. My guess is that on an average the cheats lost some 20% at least. Some lost a lot more, and some managed with less using intimidation tactics. The police story your dad said is surely what many well-connected cheats would've done.
Wrt the 50 million, how much was the year-to-year increase in the last five years?
Did I say 50 million or 50 lakhs? I get confused between lakhs and millions
.... 41 lakhs actually. Many outlets and the Tax commissioner press release linked above, reported recently that 91 lakhs (.91 crore) is the increase this year. I assumed 100 lakhs, as there is still time. They reported that 60 lakh new people join and 10 lakh leave due to death and retirement every year, so 50 lakh is the normal increase. It seems like we are at double that this year.
What I want to see is the number of people who filed exempt. I saw numbers on it for 2015-2016 (and I didn't know that exempt people had to even file!)... I have not seen the number for 16-17. The jump in that number would be rather telling. That may be where most of the 41 lakh are, right now. By the way, it may not be not just those people who might have helped the cheats. There may be a bunch of people who helped with a lakh or two here and there, or agreeing to even pay some tax. Final numbers will take a while more.
But we may simply not know the amount that really started getting spent by all these borrowed accounts people. No idea about the effect of that, as of now. Anyway, none of it can hurt one bit. It is all a good thing from now on. If the manufacturing and other slowdowns in the first quarter isn't a serious drag beyond another 3 or 4 quarters, this may all have some very serious impact later. We will see. I just don't think Modi knew well, or foresaw all of this. He was driven by some simpler ideas of black money, counterfeit, etc, and a gut feeling that it will politically help. I will still give him credit for trying to do something and managing to pull it off.