Aspectos políticos, democracia y Derechos Humanos en la realidad de Guínea Ecuatorial
III.1. DEFINICIÓN DE LA POLÍTICA
6) Derecho a la libertad física y a la integridad personal
ICICI Bank shares are listed in the US Stock exchange. As a US citizen, I own some shares. If I sell them and make a profit, should I be made liable to pay Capital Gains Tax in India, U.K. and other countries, where ICICI Bank holds Assets?
Judge: order, order.
IT Commissioner: umm…well….ahhh… oh yes, you and Hutchison International, have intentionally conspired to make this deal in Cayman‘s Island. Because it is a tax haven. Because Cayman island doesn‘t have capital gains tax. You guys are very smart, you intentionally create such flimsy companies in Tax havens, and then make merger and acquisitions to avoid as much tax as possible. You‘re not the only culprit; plenty of Indian companies are doing the same thing. [But since you‟re a big „bakraa‟ worth Rs.12000 crores we‟ve special interest in you]
Mr. Vodafone: of course. Why not? It is a completely legal activity to save tax through legal means. What‘s wrong in that? Blame it to your outdated laws and tax-treaties. If a drunk rich brat kills 15 people in drunk driving, he still gets out of jail on bail, thanks to your outdated laws So who is to blame? The drunkard or the Government?
Yes we save taxes by running the show through tax havens in Mauritius and Caymand island, but you cannot ignore the enormous employment generated because of me. See how many people got jobs in Vodafone outlets and the substantial increase in excise duty, sales tax and other duties. Not to mention all those people who got jobs, they also pay income tax, they go out purchase homes, automobiles, perfumes and skin whitening creams and what about that
indirect employment generated in those industries?
You cry about the puny 12000 crores in capital gains, what about the million dollar happiness in the lives of all those people benefitted directly or indirectly because of my
entrepreneurship?.
192 January 2012
Landmark Judgment of Supreme court
Saare sabuto aur gawaaho ko madde nazar rakhte hue, ye adalat iss natije par pahuchi hai ki ( र और ह र र ह , इ र ह ह )
Indian authorities do not have jurisdiction on an overseas transaction.
Certainly and stability form the basic foundation of any fiscal system. Tax policy
certainty is crucial for taxpayers (including foreign investors) to make rational economic choices in the most efficient manner
This offshore transaction evidences participative investment in India and not a sham.
The demand of nearly 12,000 crore by way of capital gains tax, in my view, would
amount to imposing capital punishment for capital investment since it lacks authority of law and therefore stands squashed.
Location: Finance minister‘s Office, Delhi
There is pindrop silence in the office. Babus are not even playing that ―Solitaire/Hearts‖ card-game in their Windows 98 computers.
Some of them are busy in toilet, actually leaking information about ‗possible future-moves of their minister‘ to their journalist friends in TimesNow, via SMS from their Antique Nokia-1100 mobile phones.
Minister (entering the Office) : Itnaa Sannaataa kyo hai bhai? (इ ह ?) IT Commissioner: Because We have suffered a humiliating defeat in Supreme court, in that Vodafone case.
Minister: You mean as humiliating as Team India‘s defeat in Austrialian test-matches?
IT Commissioner: Well, not *that* humiliating, but still very humiliating.
Minister: I cannot let this matter go. Rs. 12000 crores is not a small amount! I‘ve Gujarat Assembly elections ahead, I need the ca$h! Gang up the best tax-lawyers, study the judgement and File a review petition in Supreme Court again!
March 2012
Supreme court rejects the review petition.
Those Best Tax-lawyers demand lakhs of rupees as consultation fees from Government of India.
IT Commissioner (to self): Khaayaa piyaa kucchh nahi, glass fodaa…. ( ह, ..)
Budget 2012
Minister (announcing in Parliament): I propose an amendments in the Income Tax Act with retrospective effect from 1962 so that all persons, whether residents or non-residents, having business connection in India, will have to deduct tax at source and pay it to the government
193 even if the deal is executed on a foreign soil!
With this ‗move‘, I‘m trying to get around the court‘s decision which said that
the government cannot tax a deal between two foreign entities, even if the transaction includes an Indian asset.
Our party has ‗history‘ of trying to outsmart judiciary, whether it was Shah Bano case or 42nd Constitutional amendment or….
Random MP: (putting his i-pad aside) What does this ―retrospective effect‖ mean?
Peon: Retrospective effect means if Government passes such law in 2012, still the past deals between companies made in 2007 can be taxed. Only Civil laws can be made with retrospective effect. But criminal laws cannot be made with retrospective effect.
Random MP: Elaborate
Peon: Criminal law cannot be made with retrospective effect, meaning if in 2012, Government passes a law that mobile phone thieves will get life time imprisonment, then only those thieves who‘re caught in 2012, after the commencement of that law, will be jailed for lifetime.
But, If a thief stole the mobile phone in 2007, he cannot be given lifetime imprisonment, he has to be tried under the punishment provision that were in effect during that time. On same logic, people are still languishing in jail under TADA and POTA cases, even though those acts are scrapped now.
Random MP:That means I must hurry and do as much corruption as I can, before that Lokpal thing comes in effect, Whaat an idea Sir-ji.
Outside Parliament
Salman to Media: Right now we only know that it is a unanimous judgement that has gone against the revenue authorities… We have to examine. We obviouslyneed revenue for the government‟s important programmes.
Epigue
Anand: Just like the Govt insists on tax revenue, even when the supreme court dismissed their case,
we citizens need to insist that the revenue is spent wisely by the Govt on the welfare of its citizens.
The extra tax revenue that the govt would have got from Vodafone would not benefit any citizen.
Instead 90% of the money would find their way into the pockets of our politicians, while the rest is frittered away as salaries for a burgeoning bureaucracy.
Demo Question for CSAT
Which of the following statements are true?
Capital Gains tax is a type of Indirect tax
There are three types of Capital Gains tax in India: Short term, Medium term and Long term.
Central Excise Department looks after collection of Capital Gains Tax
Direct Tax Code 2010, has no provisions about Capital Gains Tax.
194
URL to article: http://mrunal.org/2012/05/vodafone-essar-case.html
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[Economy] Calculating Income Tax, Tax Exemption vs Tax Deduction, Rajiv Gandhi Equity Saving Scheme
1. What are the Income tax slabs in Budget 2012?
2. How to Calculate income tax?
3. 3% educational cess
4. What is the difference between Tax exemption and tax deduction?
o #1: Tax exemption o #2: tax deduction
5. Union budget 2012: provisions of Tax Deduction and Tax Exemption o What is Tax Planning?
o Who is Tax-Consultant?
o Black Money and Agro-Income 6. How does RGESS save Rs.5000 In Tax?
o Case #1: don‘t invest in RGESS
o Case #2: investment maximum in RGESS 7. The important questions : Food for Thought
You may have read this statement in newspaper, tv-channels.
Rajiv Gandhi Equity Saving Scheme (RGESS) will give maximum benefit of Rs. 5,000 in tax-saving.
What does it mean? Before we can talk about that, let‘s see the basics of Income Tax calculation, Exemption and Tax Deduction.
What are the Income tax slabs in Budget 2012?
You know about this already:
Income tax slab (in Rs.) Tax
0 to 2,00,000 No tax
195 2,00,001 to 5,00,000 10%
5,00,001 to 10,00,000 20%
Above 10,00,000 30%
(We are skipping senior citizen provisions) Time for a very simple question:
if your income is Rs.15 lakhs, how much income tax do you have to pay?
15 lakhs is above Rs.10 lakhs, so you fall in 30% income tax slab.
30% of 15 lakhs equals to 4.5 lakhs income tax.
Sorry 4.5 lakhs is Incorrect Answer. Infact you‘re income tax will be quite less than Rs.4.5 lakhs.
Why?
Because income tax is not calculated like that.
Then how to calculate income tax?
Suitcase approach
Imagine there are four suitcases labeled one, two, three, four.
You have to fill up each suitcase with your cash.
But there are some conditions
you have to fill these suitcases in serial order: 1,2,3 then 4
First suitcase can contain maximum two lakh rupees only. Once it is fully packed, you move to the next suitcase.
Second suitcase can hold maximum three lakh rupees
Third suitcase can contain maximum five lakh rupees
Fourth suitcase can contain any amount of money. No maximum limit.
Step #1: Distribute money in suitcases
Now start distributing your 15 lakh rupees into these four suitcases suitcase number Money packed
One 2,00,000
196
Two 3,00,000
Three 5,00,000
Four 5,00,000
Total 15 lakhs
Step #2: Make a new column and apply those four tax slabs suitcase number Money packed Tax slab
One 2,00,000 0%
Two 3,00,000 10%
Three 5,00,000 20%
Four 5,00,000 30%
Total 15 lakhs –
Step #3: Calculate the income tax to be paid for each suitcase suitcase number Money packed Tax slab Tax to be paid
One 2,00,000 0% Zero
Two 3,00,000 10% 30,000
Three 5,00,000 20% 1,00,000
Four 5,00,000 30% 1,50,000
Total 15 lakhs – 2,80,000
197
The total sum of income tax on all four suitcases =2,80,000 lakhs So, if your income is 15 lakhs, you have to pay 2.8 lakhs as income tax.
But we forgot some important things: educational cess, tax exemption, tax deduction.
3% educational cess Cess means tax on the tax.
Union budget 2012, has provision of 3% educational cess.
Meaning 3% of 2.8 lakhs, equal to Rs.8400
Hence the total income-tax that you to pay = 2.8 lakhs +8400= Rs.2,88,400 Now time for two most important parts in the income tax calculation.
What is the difference between Tax exemption and tax deduction?
#1: Tax exemption
Income tax= the tax on your ―income‖, but you don‘t have to pay income tax on certain type of income. For example
Policemen and Army jawans get uniform maintenance allowance: Suppose Rs.1000 to wash and iron their uniforms and to polish their boots every month.
Rs.1000 every month multiplied with 12 months equals to Rs.12,000 every year, apart from the regular salary.
But Budget-2012 says this Uniform Allowance income is exempted from taxation.
So, If an army jawan earns Rs. 2,12,000, then his taxable income is 2 lakhs minus Rs. 12000 exempted= Rs. 2,00,000.
Now calculate his income tax on Rs. 200,000 based on our ―suitcase approach‖. (ans. Zero tax, because Cash finished at first suitcase.)
Crux: Tax exemption is given on INCOME.
#2: tax deduction
If you spend your income on certain activities, you won‘t have to pay income tax on that much amount of your income.
E.g.50% deduction, if you invest in Rajiv Gandhi Equity Savings Scheme. (RGESS) Suppose you earn nine lakh rupees a year and invest Rs.20,000 in RGESS,
Thus , your taxable income
= nine lakh rupees minus 50% of Rs.20,000 (invested in RGESS)
= 9 lakhs-10,000
198
= Rs. 8,90,000
Now calculate the income tax on Rs.8,90,000 using our suitcase approach.
Crux: Tax Deduction is given on SPENDING
Union budget 2012: provisions of Tax Deduction and Tax Exemption Here are a few examples.
Note: I‘m not filling up the minute details and you don‘t have to mug this list.
Tax Exemption (on INCOME /
Salary) Tax Deduction (on SPENDING)
Transport / Conveyance Allowence
Child education allowence
Leave travel allowance (LTA)
Medical Allowance
Uniform / Dress allowance
Gift from relatives
Agricultural income
House Rent income
Rajiv Gandhi Equity Saving scheme.
Tax saving mutual funds (ELSS)
Five year tax-saver bank Fixed deposits
Public provident fund (PPF)
National Savings Certificate (NSC) or
National Service Scheme (NSS)
Employer contribution into New Pension Scheme (NPS)
Life insurance/Unit Linked Insurance Plan (ULIP) premium
Employee‘s contribution towards Employee provident fund (EPF)
Home loan principal amount payment.
Post office tax saving deposit or tax saving bonds
Pension scheme/Retirement plans (Secion 80CCC)
Tuition fees paid for children education
Medical Treatment of family (upto Rs.40k)
What is Tax-Planning?
It means use of Tax-Exemption and Tax-Deduction provisions in such a way that you can save maximum amount of tax.
Who is Tax-Adviser / Tax-Consultant?
These are extremely knowledgeable and experienced Chartered Accountants, MBA and Tax Lawyers.
They make customized tax-saving plans according to your requirements.
Big players in Tax Consulting = Ernst & Young, KPMG, Price waterhouse Coopers (PwC).
Recall that Vodafone Essar deal: Saving Capital Gains tax in Caymen‘s Island. These Big Players help in such huge tax-saving deals.
199 Black Money and Agro-Income
In above table, you can see that Agriculture income is ‗exempted‘ from income-tax.
Lot of film stars forge documents and show they own ‗farm-lands‘ and they‘re ‗farmers‘.
Game is simple. They take 5 crores from film producers or 50 lakhs to dance in Dubai.
But on paper they show only few lakhs as ‗legit payment received‘ and pay income tax on that part only.
Remaining money is shown as ‗income from that agricultural land‘ and thus totally exempted from income-tax.
So this is also one type of ‗Tax-Planning‗, just illegal.
Black money = income on which tax is not paid.
Coming back to the opening sentence of this article:
How does RGESS save Rs.5000 In Tax?
You already know the main provisions of Rajiv Gandhi Equity saving scheme
Only first-time investors, with annual income less than Rs.10 lakh can invest in the scheme.
One person can invest maximum Rs.50,000 only
Ya but still how is Rs.5000/- saved? You‘ve to compare two cases to find that out.
Case #1: don‘t invest in RGESS
Your income is Rs.9 lakhs, and you don‘t invest in RGESS and don‘t get any other tax deduction or tax exemptions.
The total taxable income is Rs. 9 lakhs.
suitcase number Money packed Tax slab Tax to be paid
One 2,00,000 0% Zero
Two 3,00,000 10% 30,000
Three 4,00,000 20% 80,000
Four 0 30% 0
Total 9 lakhs – 1,10,000
Thus, in case#1: you‘re paying Rs. 1.1 lakh as income tax
200 Case #2: investment maximum in RGESS
Your income is Rs.9 lakhs, and you invest to the maximum limit (Rs.50,000/-).
Thus, the taxable income is
= Rs. 9 lakhs minus 50% of Rs.50,000 ;because RGESS gives 50% Deduction.
=9 lakhs – 25,000
=Rs. 8,75,000
Now calculate income tax for Rs.8,75,000 using same suitcase approach
suitcase number Money packed Tax slab Tax to be paid
One 200000 0 0
Two 300000 10 30000
Three 375000 20 75000
Four 0 30 0
Total 875000 105000
Thus, in case#2, you pay 1,05,000 as income tax.
Difference between Case #1 minus Case #2
=1,10,000 minus 1,05,000
= Rs. 5,000
Therefore all the newspapers, magazines and TV channels shout all the time that you‘ll save Rs.5,000 by investing in RGESS. But here is a ‗fine-print‘.
This Rs.5000-magic works only if you fall under the 20% tax slab.
If your income is rupees two lakhs and you invest Rs.50,000 in RGESS, you will not save any tax. Why? Because you fall in zero% tax slab. Your annual are not taxable in the first place!
Similarly, if you are in the 10% tax slab, you will get different answers.
Homework:
(No, they‘ll not ask this in your exam, this is only for brain exercise)
Calculate the maximum possible tax saving with RGESS, if your annual income is Rs.4 lakhs.
Shortcut tip:
You can get max deduction of 25,000 (that is 50% Deduction of Rs.50000 invested in RGESS) And your given income 4 lakhs fall under 10%.
So, 10% of 25,000=Rs.2500 saved in tax.
Why does this shortcut method work? Think about it.