With reference to “Securities excluded from GST ambit in revised Bill” (November 27), it can be inferred that according to the government’s logic stocks and securities and mutual fund investments are as essential as bread and hence need exemption. If not “goods”, pray sir, are they to be treated as “prasad” from heaven? If (senior) citizens’ fixed deposits on which one earns interests can be subjected to Tax Deducted at Source, if small savings from post offices are subject to some form of tax, and this demonetisation exercise is being done essentially to increase the tax revenue, why are you exempting securities? Why should courts allow exempting a class of (wealthy) citizens who need a few lakhs of rupees to start investing and generally can make crores nearly tax-free?
The government’s argument of the necessity of foreign money inflow for growth doesn’t stand because one is only allowing one avenue of foreign inflows — stocks, not general exports. Money brought into India in the stock markets is generally hot money subject to be taken out if profits are made. This is one place which doesn’t go directly to productive activities of the nation and hence should be taxed heavily as it encourages speculation. Unfortunately, successive governments in the past two decades have treated securities as special children of the economy. Even a one per cent transaction tax in the securities market alone would yield the government more than Rs 8,000 crore per day (as the turnover is generally eight lakh crore per day). If you add commodity market it is another Rs 8-10 lakh crore of daily turnover, which means a potential revenue of Rs 15,000-16,000 crore per day! This, the government in its wisdom, chooses not to tax but make good the budget deficit by taxing the same aam aadmi through increasing rates of service tax such as from eight per cent initially to 14 per cent today. Service tax is levied on nearly everything which affects the common man daily including railway reservations and phone bills. Why should this step to exempt securities from capital gains and the goods and services tax (GST) not be considered as enhancing inequality in society, as security investments are done only by people who have surplus wealth in the first place?
Moreover, the government is considering exempting supplies to special economic zones (SEZ) and even the developers of such units from GST in the new Bill. So, essentially all manufactured goods will be “diverted” to SEZs and then taken out through the backdoor with the connivance of a few security guards, thereby encouraging generation of more black money and corruption. Tax exemption of SEZs is fundamentally wrong in the Indian context — another nation within your own nation though they use the same land, labour, air and water to make money. Because they are supposed to cater to the white-skinned and not poor Indians, they get all the tax benefits. One says “supposed” to because most exports in SEZs are dummies. The government knows it. The Comptroller and Auditor General has castigated it several times. But who cares?
M K Rathi Kolkata
M K Rathi Kolkata
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