Tax Reform - Refund of Goods & Service Tax Collected against Income Tax

The proposal:

For Any Electronic Payment made against an invoice carrying GST, the end-consumer will get a refund of (10%-20%) of that tax amount in their Income Tax calculation. The amount will automatically reflect under their PAN card on the NSDL network. No additional paperwork needs to be filed for the same.

These electronic payments can be made through any acceptable medium including credit / debit cards, online transfers, IMPS etc. In fact, the user can also get an instant SMS confirmation of the Tax Credit.

This facility is only for the purpose of end-consumers, not at each level in the supply-chain

Revenue Implications for the Government:

Potential Loss: 

• < 10-20% of Service tax collection (at least some of the users may not have taxable incomes)
• to be refunded 12 months later when the IT returns get filed

Potential Gain: 

• Incentive for people to use electronic payment means which are mapped to their PAN
• Increase in Service Tax collection as any such payment will also require a GST invoice
• Increase in Income Tax from the seller / service provider as all such income will need to get recognized
• Reduced velocity of cash impedes absorption of fake currency in the economy
• Cost of printing, collecting, destroying and re-printing currency goes down

Invoice generation during a sale process has a number of positive side-effects. It acts as a control mechanism helping the entrepreneur get the exact amount of sale. This enables the entrepreneur to scale the operations further and provide a stable quality and customer experience throughout the network. It helps open branded saloons, restaurants, garages etc. which can stand for providing quality service at reasonable price.  

Today, someone who collects and pays service tax is at a 12% disadvantage to the tax evader. This forces all the entrepreneurs planning to provide branded, quality services to focus only on the premium segment of the society. 

While we need stronger action against evaders, incentivising end-users to ask for tax invoice will also be of great help.

Request: All such ideas on this blog may have a number of practical shortcomings. Still, I believe that these can form basis of robust solutions. It will be of great help if you can help punch holes in these hypotheses.

Littering - Crime, Punishment and Redemption

Typical Scene:

• A public garden where a jogger throws a water bottle after finishing
• A beach / sea-front where empty packet of chips is discarded
• A person taking a pet dog for a walk which is pooping on the road
• ....
• ....
• 
  

Suggested Response - A Mix of Stick and Gandhigiri

Littering to be a punishable offence with fine of  >1,000 and up to a night in Jail. Alternatively, the 'CULPRIT' can get away with a warning if:

• The CULPRIT cleans the place that was just littered in full public view
• Pics are taken for before - during and after cleaning
• The CULPRIT records a 15 second video where they state their name as well as the pledge for a Swacch Bharat... 
• These contents get uploaded on a web under the heading  - The pledge for a Swacch Bharat
• The NOW REFORMED FORMER CULPRIT at their own option can share their pledge on the Social media

The objective is not to penalize but motivate.... post the cleaning up of the litter, the NOW REFORMED FORMER CULPRIT should become the ambassador for a Clean India

Intended Outcome

• Creating respect for those who keep our surroundings clean
• Punishment as a way to redemption... 
• Motivation for a lifetime
• Create new ambassadors for a Clean India

PS: The concept is partly inspired with an incident on a suburban railway station in Mumbai, narrated by a close friend working for the Railways

Swacch Bharat T-Shirts - Sponsoring the Dustbins

Presenting a thought to support the Swacch Bharat campaign. The credit to the original concept goes to my wife.

In my IIT and IIM days, selling campus T-Shirts was a way to part fund the institute festival. Just trying to take the concept a little further. Please give you valuable feedback below.

The Product:

Swacch Bharat T-Shirts with design in line with attached image should be made available. The T-Shirts will have the logo of the sponsor at the back which can be Corporates, NGOs etc.

The T-Shirts can be in any language and have flexibility in terms of designing.

Value Proposition

These T-Shirts will be available for sale @ 100 per piece. The entire proceeds will be given to a special purpose Government fund which will install One Dustbin for every 10 T-Shirts sold.

Role of the Sponsor

The Sponsor will be bear the cost of making and selling the T-shirts as well as giving the proceeds to the government with the cell no of the buyers. The quality of the T-Shirt will be a function of the value the Sponsor associates with their brand.

Role of the Government

• Acknowledge to each and every volunteer that their contribution has been received
• Ensure use of the funds collected under the scheme exclusively for creating dustbins
• Maintain a live tracker of funds collected and dustbins installed including location 

Checks and Balances

• Each buyer will get an acknowledgement SMS from the government of their contribution to Swacch Bharat.
• The Government website will display the details of the T-Shirts sold and dustbins placed
• This will also include the address of each dustbin alongwith a pic

PS: Both the T-Shirts and the Dustbins need to be Made in India.