Subramanian Swamy rightly said replace private bank's shares in GSTN with PSBs

GST bill became law previous week after president signed it post ratification by the majority of states. GST brings most of the indirect taxes under one roof. As always, the banks will be playing a major role in collecting the taxes and providing the data of collected taxes to the concerned departments. This needs a huge infrastructure to maintain, process, analyse and to connect the government department with the banks network.

Goods and Services Tax Network, (GSTN) is a Section 25 (not for profit), non-Government, private limited company. It was incorporated during the previous UPA regime to provide IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST). We can see the first two parties, state and central governments in the share holdings of GSTN. The important stake holders- Public Sector Banks which collects the taxes for the government are not in the scene. The government of India holds 24.5 per cent stake in GSTN while states together hold another 24.5 per cent. Balance 51% equity is with non-Government financial institutions like ICICI Bank, HDFC Bank, HDFC Ltd, LIC Housing Finance and NSE SIC.

GSTN has applied for loan of Rs 550 crores from IDFC. The central government is standing as guarantor for this loan though it is not a majority share holder. This is questioned by Mr Subramanian Swamy- why the majority stake holders are not the guarantors for this loan? In a way he right, but the government's interest in faster implementation of GST is not questionable. His comments on shareholding of GSTN makes the issue interesting.

Subramanian Swamy

As Mr Swamy's says partnering with private institutions to set up an institutions like GSTN to handle highly sensetive data is the matter of worry. I am not saying ICICI, HDFC or LICHF are unreliable, but when someone inside the house are capable of doing some job, calling an outsider to do the same job makes no sense. Firstly, public sector financial institutions holds the majority of share in banking industry and they are capable of partnering with government for implementation of such a high aimed mission like GST even during the period of high bad debts. Secondly, it is not ICICI or HDFC would be collecting the majority of the taxes, but it is definitely SBI, a public sector bank will be the indispensable tax collector for the government even in future. Third reason is by making public sector banks to hold stakes in GSTN, goverment would have had better control over it. Mandatory audit by CAG is always better than an offer to CAG audit. Mr Swamy's proposal to replace GSTN share holding of  private banks with public sector banks makes some sense because tax data is sensitive and also confidential. 

A reply to heavy weekend tax players

A reply to WhatsApp message complaining government imposes heavy tax on their weekend merry.

People say they are being taxed heavily.

But I am not.

I earn 10 lakhs per annum and I pay only 56,650/- per annum as the tax. That means just 5.66% tax on my total income. Where my friends in the USA are paying 30% flat of their income!

I own a two wheeler and a four wheeler. Roads are smoother and better than UPA government, wear and tear lesser than yesterday; vehicles are BS IV and I am getting BS-IV petrol everywhere. I am getting extra mileage than yesterday's, which saves me a lot.

I am health cautious and do not eat junks on every weekend. I never want to pay extra hard earned money for the lights, cushions and English speaking waitress in restaurants. I get rice, vegetables, fruits and every agriculture products without tax. My family gets LPG subsidy for cooking healthy food. We enjoy tax-free eating.

I invest in equities and equity oriented mutual funds and I have the patience to wait for at least a year. India being the fastest growing economy, I am getting good tax free returns. My investment returns are not taxed, unlike your fixed deposits returns.

If you feel your goods are taxed more than double the value it has, ask your congress MPs to support GST Bill to remove recurring taxes on goods and services.

I thank my government for taxing those who do not know how to invest and save tax, but to go on outing every weekend to eat junks and spoil their health.

I am happy to pay the taxes.

Forward this message to every responsible citizen of India.

Panama Papers Offshore Leaks explains how Vijay Mallya siphoned off the money

While banks are having a hard time with Vijay Mallya being unable to recover a huge NPA, Mallya is  said to be holidaying in London. The banks are complaining he has siphoned off the loan given to Kingfisher Airlines.

When I searched few names in Offshore Leak, the web page returned the name of Dr Vijay Mallya. I was well expecting his name in the Panama Papers. Dr Mallya owns Venture New Holding Ltd in the tax heaven of North East Carribean nation- British Virgin Island. He is also the beneficiary owner of this firm. This holds another firm Sharecorp Ltd which is registered in India. Through this company Vijay Mallya was able to have business links with different countries like Singapore, China, Britan, Italy, USA to name few. He could have siphoned off the money through this network, also avoiding the taxation. The profit was routed back to him through Venture New Holding Ltd, legally avoiding the tax, being registered in the tax heaven, British Virgin Island.

Vijay Mallya holding shadow company in British Virgin Island.
Click on the image to view larger image.

He could have owned the asset through these firms more than that is required to liquidate his loans. It is impossible for anyone to hold a company in a tax heaven like British Virgin Island without any interest of siphoning off the money or tax avoidance. The banks should pursue the matter with the investigation agencies to look into the Mallya's case in a different angle.

Bihar's Jungle Raj is back in form: Youth killed for overtaking JD(U) leader's son's vehicle

Imagine. You are driving your car on a highway in Bihar. You overtake an SUV. The people in SUV questions you for driving your vehicle faster than their vehicle. As a punishment for your superfast driving and overtaking them, you are shooted and killed.

This is happening in Bihar. JD(U) and RJ(D) alliance has brought the Jungle Raj back in Bihar. The politicians are acting as if they are the kings in the Jungle Raj.

"The Hindu" news clipping on this incedent:

"The incident happened when the son of a prominent businessman of the town, Aditya Sachdeva, a plus-two examinee, was traveling in his Swift car with his friends and allegedly overtook the SUV (Sports Utility Vehicle) driven by Rocky Singh Yadav, son of JD(U) MLC Manorama Devi under Rampur police station of the district. Rocky was travelling in his car along with a security guard provided by the Bihar Police for the politician.

“We’re returning from Bodh Gaya and soon after we overtook the SUV they started firing in the air and made us stop. Then they forced us to get out of the car and started punching us. When we tried to leave the spot, someone fired and my friend got hit”, said friend of Aditya Sachdeva who was accompanying him in the car."

This is not a stray incendent. These kind of news are frequently being reported from Bihar after JD(U) and RJD coallition assumed power.

Modus operandi of MGNREGA at Grass Root Level

I don't think it is necessary to explain anything theoretical about one of the prestigious project of Government of India for fulfilling the right to work under MGNREGA- Mahatma Gandhi National Rural Employment Guarantee Act. You will get millions of pages over internet on the theoretical functioning of the project. But I felt it necessary to draw a sketch on how it actually functions at the grass root level.

The government seems to be relaxing by believing that at least 100 days of guaranteed wage is reaching the beneficiaries after making it mandat

ory to disburse the wage through the bank accounts. When the project was started, the wage was being given in the form of food grains like wheat, jowar and rice. The officials/sarpanchs/panchayat members/local contractors used to complete the works  using the the machines like earth movers or some times completion on on papers and make money by selling those grains. Later wage in the form of money was introduced, it was much easier than earlier. The MGNREGA card holder to put his thumb impression or sign in non vernacular language and get the commission for signing, not the complete wage as guaranteed. No need to say again where it reached?

Did the direct transfer of wages through bank accounts have solved the problem? Yes, off course! That of contractors!

What is the Modus operandi?

Mr B, a Panchayat Member approaches Shri/Smt A, who has MGNREGA card, to open an account in a Nationalised Bank. The bank opens Shri/Smt A's account who had just learned to move the pen to sign in non vernacular language and issues an ATM card. Mr B deposits the minimum amount in the account and pays one days wage to Shri/Smt A for taking trouble of opening a bank account. Mr B grabs ATM card along with its PIN and the bank passbook of newly opened account. Panchayat officials identifies some work say 'cleaning of sewage on both side of the village road' to be done under MGNREGA. Mr B pays the pre-decided standard bribe to those officials and give the list of the MGNREGA card holders along with their account numbers. He, being the owner of the JCB gets it done in the matter of an hour. Or if he is influential, he gets id done on papers. Few days later he visits the ATM and withdraws the wages of hundred of MGNREGA beneficiaries without much effort than entering the ATM PIN. And it repeats.

Rahul save MGNREGA!