Posts Tagged ‘income tax’

Corrupting the movement

June 2, 2011 Leave a comment

The day opened to a very strange piece of news: the megastar yogastar Baba Ramdev has refused to call off his `fast unto death’ on the issue of black money. Ok, it’s not very strange if we simply view this as a publicity stunt. But is it only for publicity or does he have deeper reasons for this fast? Some think that he is doing this at the behest of his political mastersĀ to derail the Jan Lokpal Bill. I think the bill is a bad idea, and I think Ramdev has other, more personal reasons to go on this fast. The trusts that he is associated with are enormously wealthy, and little is known about the source of their income, or the source of income of people who donate to these trusts. One politician did ask for an investigation into the source of his assets, but nothing else has been heard about it since. My feeling is that Ramdev is trying to establish himself as a leader of the anti-corruption lobby in order to avoid any serious charge of corruption for himself or his financial backers. Right now, any investigation into his amassed wealth, or even of his followers, can be projected as an underhanded scheme by the government to undermine his credibility. So all his financial dealings remain unseen by the probing eyes of the Income Tax department — and I think he is only the face of an organisation, not the brains — there are others behind the financial dealings of his organization.

Someone really should go on a fast unto death for investigating the finances of Ramdev.


Taxing the doctors

May 14, 2010 Leave a comment

As this news report from the BBC shows, doctors in Greece have been guilty of the same sort of practices as I mentioned in an earlier post, of not giving a receipt. And as the Greek economy has crashed and the people have started rioting in protest of the `austerity measures’, the government has fined a few doctors for underreporting their income. Surely our government can do something similar, after all, the Indian economy is in a worse shape than Greece’s — at least in terms of a much higher percentage of people being without food, water, clothing, education or medical services.

Gifts to the rich

April 25, 2010 1 comment

Thanks to Paranjoy Guha Thakurta for writing what must be in the minds of many — the government gets nothing by way of service taxes from doctors and lawyers, and could have gained an additional Rs. 10000 crores from taxing these two professions alone! And what he does not ask has been on my mind for a while — many doctors and lawyers with a private practice, i.e. outside a hospital or a firm, do not offer a receipt unless asked. Of course they always provide a receipt when asked, but many clients do not bother to ask for a receipt, especially if they are not reimbursed for the bills. Lawyers’ bills are not reimbursed in general anyway.

Guha Thakurta also mentions that `revenue foregone’, i.e. the revenue given up by the government by way of exemptions and concessions (and `incentives’ I suppose) to companies rose from Rs 4,58,516 crore in 2008-09 to Rs 5,40,269 crore in 2009-10. I wonder how much revenue is lost through not auditing the accounts of doctors and lawyers.

A possible RTI question would be how much income — outside salaries, if any — is declared by these professionals, and how many doctors and lawyers have been investigated by the Income Tax dept for lifestyles not appropriate to declared incomes.

Unreal Estate

December 5, 2009 Leave a comment

To anyone looking for a flat in Calcutta and surroundings it must seem that real estate prices in the city have gone through the roof over the last couple of years. Residex, the new real estate index confirms this. Rs. 100 invested in real estate in 2007 would have been Rs. 159 at the end of June, 2009, a bigger growth than in any other Indian city. In comparison, real estate worth Rs. 100 in 2007 would have been worth Rs. 58 in Bangalore, Rs. 71 in Jaipur, and Rs. 65 in Hyderabad.

The area-wise growth in real estate prices in is also quite instructive. Places like Alipur and Bhawanipur are always considered expensive to live in, and price increases there have stayed ahead of the average. On the other hand, far-flung places like Thakurpukur or Sonarpur show more than a 70% increase in prices, while the very thickly populated, almost slummy area of Jadavpur has seen a near doubling of prices in that year and a half. Not to mention the astounding trebling of real estate prices in Barrackpore, which isĀ  a suburb of Calcutta more in principle than in practice.

So what is the explanation behind this extreme growth in real estate prices? Several big players entered the Calcutta real estate market around the year 2000, and they have been pushing the prices up all along. Not all the flats built by these builders get sold immediately. Half or more of the flats remain empty to begin with and are sold over time, either directly by the builders themselves or by real estate investors. I have met some of these `investors’, and thought they were proxies of the same builders or banks, helping to drive up real estate prices.

In any case, this helped keep prices high for branded real estate. But now small builders and their agents have started to raise prices to very high levels, about 60-70% of the prices demanded by the top builders. I doubt if they are selling all their flats either. So how are these prices sustained? My guess is the following. The big builders got in because the CPI-M acquired land through less than legal means and gave it away at rockbottom prices. Or because the government allowed various laws, including environmental ones, to be circumvented by the builders. Or allowed industrial land to be converted into residential land. All in return of fat bribes, one presumes. But in any case, the initial investments for the builders at that time were substantially less than what is normal for any city of this size. So the builders could take time to sell the flats and still make a profit. That was for the big builders. But more recently, small builders have started charging exorbitant rates. It is not clear if small builders can afford to leave unsold flats lying around, but medium sized builders certainly can. That suggests that they are probably getting similar `facilities’ as the big builders. Not only the CPI-M, which is trying to make as much cash as possible before it is inevitably ousted from power in another year or so, but also the TMC, some of whose area bosses are notorious for their corruption, are helping the landsharks.

And there is another reason for the price hike. Many flats are bought by people who do not intend to live there. Such buyers also include corporate houses and banks. Even in buildings as old as 30 years, about 10% of the flats are unoccupied, owned by corporate entities and banks. And in many cases, flats are a way to park unreported cash. With various economic bubbles bursting of late, banks and corporate houses can be expected to wake up to the fact that they have very large non-performing assets in the form of unoccupied flats. And if the government follows its own rules and demands a tax return of everyone who has a flat in the city, it will find a lot of hidden treasures. And then the real estate bubble of Calcutta will burst again, like in many other cities across the country.