New Delhi: In a so-called “bid to transform the current Indian socio-economic scenario” and “provide relief to the middle class while boosting the industrial sector”, the BJP is looking at a “revolutionary” five-point proposal to abolish all direct and indirect taxes (except customs duty to protect domestic markets), including sales tax, income-tax, excise duties, service tax, VAT and corporate tax, among others.
A think-tank, Arthakranti, had a series of meetings with the top BJP leadership, including L.K. Advani and Narendra Modi, to discuss the proposal. Even RSS chief Mohan Bhagwat has been briefed about the proposal. Instead of direct and indirect taxes, the think-tank has proposed to impose a tax of “say two per cent” on every banking transaction.
While the BJP leadership, which is preparing its “vision document”, is debating the proposal, the national spokesman of the think-tank, Deepak Karanjikar, claimed that “it will generate a revenue of Rs 15 lakh crore” for the government. The proposal, incidentally, will take at least three years for implementation if accepted by the ruling party at the Centre. A draft parliamentary bill has also been prepared for the “new taxation system” by the think-tank.
Some in the BJP are, however, sceptical about the proposal.
New tax proposal aims to reduce graft
As per the thinktank Arthakranti’s proposal to BJP leaders, the transaction tax on credit accounts will be shared by the Centre, states, local authorities and the transacting bank. High denomination currency above Rs 50 is proposed to be abolished. “Some 58 per cent of the population pays Rs 20 a day so they will not be affected by this,” said Mr Karanjikar.
Under the proposal, currency transactions will not attract any transaction tax. But, it is proposed, cash transactions above a level, say Rs 2,000, will be deemed illegal.
“If you buy anything, like a camera, above this limit in cash and if there is some problem with the product, you will not be able to enforce the warranty on it as the transaction will be considered illegal,” said Karanjikar.
The thinktank said that its proposal will bring more transparency and tackle the issue of black money.