Virgo Libran born in Kovvur to Satyavathi and Veerabhadracharyulu. Seeking Humanism. Being a Righteous Soul.

Monday, 15 January 2018

Vasanth Kumar Nagulakonda

Tax deduction at the destination to prevent corruption.

No corruption: No tax deduction at source.

Currently, the payer is the one who pays tax at source and the receiver has a privilege to evade tax in most cases. This encourages corruption, thus leading to lesser tax revenue for the Government.

What if banks deduct tax at the destination, that is at receiver's end? Let us discuss the benefits of it below.
  • A simple global software change in all banks can facilitate this without a big hassle.
  • The concept of Income Tax can be eliminated. Governments don't need Income Tax Department anymore because banks take care of tax deduction for every transaction at receiver's end.
  • When someone transfers a huge amount of black money to one's account abroad, then tax is deducted by the foreign bank. This will discourage money laundering and corruption.
  • Since many people will be paying tax through the bank, the tax rate can be reduced drastically to benefit the common man.
  • People will be encouraged to pay third-party electronically for ensuring payment of tax at seller's end.
  • Even the Corrupted will be paying taxes indirectly with their bank transactions. The only way they can evade this is with cash transactions, so we should move towards a cashless society.
The tax deducted at a destination, that is at receiver bank, can be shared among Governments of the source and destination localities as per their agreements.

Check how Cashless Economy can help this idea. The government can encourage electronic or cashless transactions by making cash transactions not legal for the consumer to seek justice in case the purchased item/ service is fraudulent.