The culture of tax evasion in India
Anil
Tripathi explains how most people evade taxes in India.
I went to a wood store and bought some plywood
worth Rs.20,000/-.
The shopkeeper writes something on a small piece of
paper, which he calls a bill and gave it to me.
I asked for a proper bill. He said “A proper bill
means 12.5% VAT”, which counts up to: 12.5% of 20,000 i.e. Rs.2,500/-. The
shopkeeper motivates me to evade a VAT of Rs.2,500, whereas he plans to evade
Income Tax of approximately Rs. 1000/- on a sale of just Rs.20,000/-. This
means a total revenue loss to the state was of Rs.3,500 approximately on a
small sale of Rs.20,000.
This example is just an incident from a shop in a
small city; just imagine the big picture, where a Revenue loss of millions is
taking place just because WE DO NOT ASK FOR A BILL. Here we must not generalize
that every shopkeeper or seller is the same but in present scenario, everyone
thinks that tax evasion is a smart way of making money.
This example is from a sweet shop.
Again for the realization of a big picture and our
unawareness that lead to a loss of millions of rupees every day.
I bought some sweet worth Rs.240 and some snacks
worth Rs.52.
The shopkeeper did not gave me the bill. According
to the taxation system, sweet has applicable VAT rate of 5% i.e. Rs. 12 on a
sale of Rs.240 and on snacks the VAT rate is 14% i.e. Rs.7 on Rs.52. On a total
sale of Rs.292 the state suffered a revenue loss of Rs.19. Suppose 2000 people
go to this shop and make the same purchase as mine, then it is a total loss of
Rs. 38,000 every day and this is just a VAT evasion. I have not included Income
Tax evasion here. Just by the VAT amount from that particular shop if properly
paid, can give employment to 114 people with Rs. 10,000 salary per month just
to clean that area. If a market is clean without rubbish and dirt then it will
certainly improve the business as well.
It is commonly seen especially on a sweet shop that
when you ask the price of a sweet, the shopkeeper will tell you Rs.240 per kg.
If you take the bill it will say, “Sweet Price: Rs.228 per kg and VAT: Rs 12”.
This clearly means that he is taking VAT from us on every sale but that VAT
goes into his pocket when we don't take a bill.
This example is when I went to buy some vegetables.
There were some vendors sitting on a government land and were selling
vegetables and other stuff. Apparently that place was full of dirt and garbage
and full of Vegetable vendors.
I went up to a vendor and asked him “You must be
earning around Rs.500 to Rs.1,000 everyday, isn't that right ! Then why don't
you all contribute and hire someone to clean this place?” After listening to
this, the vendor got very angry and replied
“Sir, what do you think ? I make profit of
rupees 3,000 everyday just by selling these vegetables. Morever, I sell flowers
worth rupees 10,000 everyday and recently I have sold my land for Rs.4 Crores”.
I congratulated him and asked him, “It is good that
you are earning well and use all facilities provided by the government. viz.
schools, hospital, streets etc. You get everything from this country and in
return, what do you give to your country ?
Answer – Nothing except extra dirt and garbage.
The person who is living in this country; getting
prosperous in here; utilizing all the resources of this country but doesn't
want to give anything to his country in return and even expecting that
everything will be fine on its own.
I was invited at a religious function and the host
of which was a businessman.
I saw people were calling him 'SETH JI' and I was
told that he had donated Rs.200,000 in the temple along with 500 blankets to the poor people. He also arranged a feast for
1000 people.
I asked him “How did you donate money in the
temple, by cheque or by draft?”
He replied “If I had donated through cheque or
draft, my white money would have got affected. I therefore had to pay by cash.”
Not only this, he didn't take a bill for the
blankets and also paid in cash to the caterer to save VAT amount.
This means that the money he evaded from tax and
gave in the temple was called 'DONATION' and the same person is treated with
respect in spite of the fact that he has robbed nation's wealth by doing so. He
is a Traitor but surprisingly our society calls him Seth Ji instead.
Recently I wanted to buy a property in Jaipur.
I saw an advertisement in a newspaper about a
house. The cost of the house was Rs.38,00,000 The builder said “I will accept
only Rs.13,00,000 through cheque. Rest you have to pay in cash.”
On asking the reason, he said for a receipt over
Rs. 13,00,000, will be called Income and he will have to pay tax on that
amount, which he doesn't wish to pay.
This incident is just one example. I visited around
thirteen builders and except one builder, all others were not interested in
paying any tax to the government. Anywhere you go; there is a loss of millions
every day to our Government because we lack transparency in the property
business.
In the real estate business, majority of people
evade not only income tax but also the stamp duty that too without any trouble.
You go to any shop and on asking for bill you will
get one of the two replies –
“Do you need a proper bill ?” or “If you take a
bill, you need to pay extra tax .”
Here you should understand that by not giving you a
bill he is not willing to save your tax money but he is more interested in
saving his Income Tax and extra effort of keeping proper accounts.
I went to buy some Granite. I checked out around 10
different stores to get the best quotation and a proper bill.
My search ended at a “Limited” company.
I asked the manager “I need some Granite but I also
require a bill for the purchase.”
Manager replied “Yes of course sir, we shall
provide you with bill, we don't do anything without bill.”
I was happy to see that I found a right place. I
chose granite which was available at the rate of Rs. 150 per sq ft. I wanted to
buy 100 sq. ft of Granite.
On seeing the bill, I was shocked. The Bill said
“Granite at the rate of Rs.27 per sq ft.” whereas I was charged at the rate of
Rs. 150 per sq. ft.
I asked the manager about it.
He replied “Sir, we cannot provide you a bill of
more than Rs.27 per sq ft as we have not yet issued any bill more than this
since beginning.”
I was very annoyed to see an open cheating of the
country's revenues right in front of my eyes.
He asked me “Are you new to this country? This is
INDIA, here everything is allowed.”
I had to return without buying any Granite.
Courtesy: Anil Tripathi
