What exactly is the West Bengal government doing with all the money ?

Discussion in 'Economy & Infrastructure' started by sehwag1830, Feb 18, 2012.

  1. sehwag1830

    sehwag1830 Tihar Jail Banned

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  3. pmaitra

    pmaitra Moderator Moderator

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    What are the Bengalis doing with the money? Not many Bengalis will be able to answer because they are not the ones taking the money.

    Perhaps Mamata can? After all, she is the CM and it is the WB government who is borrowing money? What for? That is the question.

    Regarding industrialisation, I wish it happened, but the guy who truly wanted that was thrown out last elections. Now WB is back to Jyoti Basu era regressive policies. Not that the majority don't want industrialisation, but often, a minority can stall the endeavour of the majority. Singur being a case in the point.

    God bless the state - but to the question of the opening post, wrong premise. Ask Mamata, not the Bengalis.
     
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  4. Ray

    Ray The Chairman Defence Professionals Moderator

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    I presume they also contribute to the national exchequer and expect that the dues as per the law is paid to them!
     
  5. Ray

    Ray The Chairman Defence Professionals Moderator

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    AXATION SYSTEM IN INDIA

    India has a well-developed tax structure with clearly demarcated authority between Central and State Governments and local bodies. Central Government levies taxes on income (except tax on agricultural income, which the State Governments can levy), customs duties, central excise and service tax.

    Value Added Tax (VAT), (Sales tax in States where VAT is not yet in force), stamp duty, State Excise, land revenue and tax on professions are levied by the State Governments. Local bodies are empowered to levy tax on properties, octroi and for utilities like water supply, drainage etc.

    In last 10-15 years, Indian taxation system has undergone tremendous reforms. The tax rates have been rationalized and tax laws have been simplified resulting in better compliance, ease of tax payment and better enforcement. The process of rationalization of tax administration is ongoing in India.

    Since April 01, 2005, most of the State Governments in India have replaced sales tax with VAT.

    Taxes Levied by Central Government
    Direct Taxes
    Tax on Corporate Income
    Capital Gains Tax
    Personal Income Tax
    Tax Incentives
    Double Taxation Avoidance Treaty
    Indirect Taxes
    Excise Duty
    Customs Duty
    Service Tax
    Securities Transaction Tax
    Taxes Levied by State Governments and Local Bodies
    Sales Tax/VAT
    Other Taxes
    Direct Taxes

    Taxes on Corporate Income

    Companies residents in India are taxed on their worldwide income arising from all sources in accordance with the provisions of the Income Tax Act. Non-resident corporations are essentially taxed on the income earned from a business connection in India or from other Indian sources. A corporation is deemed to be resident in India if it is incorporated in India or if it’s control and management is situated entirely in India.

    Domestic corporations are subject to tax at a basic rate of 35% and a 2.5% surcharge. Foreign corporations have a basic tax rate of 40% and a 2.5% surcharge. In addition, an education cess at the rate of 2% on the tax payable is also charged. Corporates are subject to wealth tax at the rate of 1%, if the net wealth exceeds Rs.1.5 mn ( appox. $ 33333).

    Domestic corporations have to pay dividend distribution tax at the rate of 12.5%, however, such dividends received are exempt in the hands of recipients.

    Corporations also have to pay for Minimum Alternative Tax at 7.5% (plus surcharge and education cess) of book profit as tax, if the tax payable as per regular tax provisions is less than 7.5% of its book profits.

    Capital Gains Tax

    Tax is payable on capital gains on sale of assets.

    Long-term Capital Gains Tax is charged if

    • Capital assets are held for more than three years and
    • In case of shares, securities listed on a recognized stock exchange in India, units of specified mutual funds, the period for holding is one year.

    Long-term capital gains are taxed at a basic rate of 20%. However, long-term capital gain from sale of equity shares or units of mutual funds are exempt from tax.

    Short-term capital gains are taxed at the normal corporate income tax rates. Short-term capital gains arising on the transfer of equity shares or units of mutual funds are taxed at a rate of 10%.

    Long-term and short-term capital losses are allowed to be carried forward for eight consecutive years. Long-term capital losses may be offset against taxable long-term capital gains and short-term capital losses may be offset against both long term and short-term taxable capital gains.

    Personal Income tax

    Personal income tax is levied by Central Government and is administered by Central Board of Direct taxes under Ministry of Finance in accordance with the provisions of the Income Tax Act. The rates for personal income tax are as follows:-

    Income range (Rupee) Tax Rate (%)

    0-100,000 Nil
    1,00,000-1,50,000 10
    1,50,000-2,50,000 20
    2,50,000 and above 30

    Surcharges of 10% on total tax is levied if income exceeds Rs. 8,50,000

    Rates of Withholding Tax

    Current rates for withholding tax for payment to non-residents are:-

    (i) Interest 20%
    (ii) Dividends Dividends paid by domestic companies: Nil
    (iii) Royalties 10%
    (iv) Technical Services 10%
    (v) Any other services Individuals: 30% of the income
    Companies: 40% of the net income

    The above rates are general and are applicable in respect of countries with which India does not have a Double Taxation Avoidance Agreement (DTAA).

    Tax Incentives

    Government of India provides tax incentives for:-
    • Corporate profit
    • Accelerated depreciation allowance
    • Deductibility of certain expenses subject to certain conditions.

    These tax incentives are, subject to specified conditions, available for new investment in
    • Infrastructure,
    • Power distribution,
    • Certain telecom services,
    • Undertakings developing or operating industrial parks or special economic zones,
    • Production or refining of mineral oil,
    • Companies carrying on R&D,
    • Developing housing projects,
    • Undertakings in certain hill states,
    • Handling of food grains,
    • Food processing,
    • Rural hospitals etc.

    Double Tax Avoidance Treaty

    India has entered into DTAA with 65 countries including the US. In case of countries with which India has Double tax Avoidance Agreement, the tax rates are determined by such agreements. Domestic corporations are granted credit on foreign tax paid by them, while calculating tax liability in India.

    In the case of the US, dividends are taxed at 20%, interest income at 15% and royalties at 15%.
    Indirect Taxes

    Excise Duty

    Manufacture of goods in India attracts Excise Duty under the Central Excise act 1944 and the Central Excise Tariff Act 1985. Herein, the term Manufacture means bringing into existence a new article having a distinct name, character, use and marketability and includes packing, labeling etc.

    Most of the products attract excise duties at the rate of 16%. Some products also attract special excise duty/and an additional duty of excise at the rate of 8% above the 16% excise duty. 2% education cess is also applicable on the aggregate of the duties of excise. Excise duty is levied on ad valorem basis or based on the maximum retail price in some cases.

    Customs Duty

    The levy and the rate of customs duty in India are governed by the Customs Act 1962 and the Customs Tariff Act 1975. Imported goods in India attract basic customs duty, additional customs duty and education cess. The rates of basic customs duty are specified under the Tariff Act. The peak rate of basic customs duty has been reduced to 15% for industrial goods. Additional customs duty is equivalent to the excise duty payable on similar goods manufactured in India. Education cess at 2% is leviable on the aggregate of customs duty on imported goods. Customs duty is calculated on the transaction value of the goods.

    Rates of customs duty for goods imported from countries with whom India has entered into free trade agreements such as Thailand, Sri Lanka, BIMSTEC, south Asian countries and MERCOSUR countries are provided on the website of CBEC.

    Customs duties in India are administrated by Central Board of Excise and Customs under Ministry of Finance.

    Service Tax

    Service tax is levied at the rate of 10% (plus 2% education cess) on certain identified taxable services provided in India by specified service providers. Service tax on taxable services rendered in India are exempt, if payment for such services is received in convertible foreign exchange in India and the same is not repatriated outside India. The Cenvat Credit Rules allow a service provider to avail and utilize the credit of additional duty of customs/excise duty for payment of service tax. Credit is also provided on payment of service tax on input services for the discharge of output service tax liability.

    Securities Transaction Tax

    Transactions in equity shares, derivatives and units of equity-oriented funds entered in a recognized stock exchange attract Securities Transaction Tax at the following rate:-

    • Delivery base transactions in equity shares or buyer and seller
    each units of an equity-oriented fund – 0.075%
    • Sale of units of an equity-oriented fund to the seller mutual fund – 0.15%
    • Non delivery base transactions in the above – 0.015%
    • Derivatives (futures and options) seller – 0.01%

    Sales Tax Acts of various State Governments and Central Sales Act governed the application of Sales Tax/VAT.

    Sales Tax/VAT

    Sales tax is levied on the sale of movable goods. Most of the Indian States have replaced Sales tax with a new Value Added Tax (VAT) from April 01, 2005. VAT is imposed on goods only and not services and it has replaced sales tax. Other indirect taxes such as excise duty, service tax etc., are not replaced by VAT. VAT is implemented at the State level by State Governments. VAT is applied on each stage of sale with a mechanism of credit for the input VAT paid. There are four slabs of VAT:-

    • 0% for essential commodities
    • 1% on bullion and precious stones
    • 4% on industrial inputs and capital goods and items of mass consumption
    • All other items 12.5%
    • Petroleum products, tobacco, liquor etc., attract higher VAT rates that vary from State to State

    A Central Sales Tax at the rate of 2% is also levied on inter-State sales and would be eliminated gradually.

    Municipal/Local Taxes

    • Octori/entry tax: – Some municipal jurisdictions levy octori/entry tax on entry of goods
    Other State Taxes
    • Stamp duty on transfer of assets
    • Property/building tax levied by local bodies
    • Agriculture income tax levied by State Governments on income from plantations
    • Luxury tax levied by certain State Government on specified goods

    Taxation system in India
     
  6. pmaitra

    pmaitra Moderator Moderator

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    Definitely, dues must be paid.

    However, in this case, it is WB who is borrowing and the money will be due to the centre, not to the state.

    Mamata has already done all she could by introducing trains and other projects in the state. Good for the state, and a pro-Didi vote back; yet, other more deserving states continue to be ignored. Mamata would have done a state a great favour by not increasing the burden of embarrassment any further.
     
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  7. Ray

    Ray The Chairman Defence Professionals Moderator

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    EXPLANATORY MEMORADNUM AS TO THE ACTION TAKEN ON THE RECOMMENDATIONS MADE BY THE THIRTEENTH FINANCE COMMISSION IN ITS REPORT SUBMITTED TO THE PRESIDENT ON DECEMBER 30, 2009


    Sharing of Union Taxes

    4. The Commission has recommended that for its award period, the share of States in the net proceeds of Union taxes may be fixed at 32%. The Commission has also recommended on the inter-se distribution of the States’ share amongst the States. The details of the formula for inter -se distribution and the corresponding share of each State recommended by the Commission are indicated in Chapter 8 of the Report. It has also recommended that the total transfers to the States on the revenue account be subjected to an indicative ceiling of 39.5% of the gross tax revenues of the Centre.

    http://fincomindia.nic.in/TFC/13fcrExpMemo.pdf
     
  8. Ray

    Ray The Chairman Defence Professionals Moderator

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    States pay high rates to borrow


    MUMBAI: State governments are being forced to pay higher rates to borrow money from the market, thanks to the sharp fall in mobilizations through small saving schemes and the excess supply of government papers in the market. On Tuesday, RBI auctioned bonds of 11 states, aggregating nearly Rs 7,600 crore with the highest cut-off yield-the rate of interest a state government will have to pay-at 9.09% per annum. Compared to this, around the same time last year, states paid a rate of interest of 8.40% to borrow from the market.

    After several years, the rates being offered by states to borrow from the market have shot up beyond 9%, bond market dealers said. Even during the months soon after the collapse of Lehman Brothers in September 2008, state governments paid about 8.25-8.55% to borrow from the market.

    The rise in rates is mainly because states, witnessing low inflows from the centre's small savings corpus, are being forced to borrow more from the market. As per rules, 75% of the total small savings mobilizations are given to the states while the centre gets to keep the balance 25%. This year collections through this channel witnessed a sharp decline as rates of interest in bank fixed deposits (FDs) rose much above the rates offered in small savings instruments like schemes offered by the post offices and National Savings Certificate.

    As per the recent government data, between April and August 2011, investors, mainly retail investors who prefer small savings instruments because they offer tax advantages, had taken out nearly Rs 5,500 crore from these schemes. Compared to this, investors had parked over Rs 25,000 crore in small savings schemes in the same period of 2010.

    In Tuesday's auction, cut off yields for Maharashtra (which borrowed Rs 2,000 crore) and Tamil Nadu (Rs 600 crore) were 9.09% while for Haryana (Rs 500 crore), it was at 9.03%, RBI data showed.

    States pay high rates to borrow - The Times of India
     
  9. Ray

    Ray The Chairman Defence Professionals Moderator

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    The above is just to explain the system and the fiscal mechanisms wherein the debt can spiral if not checked by good fiscal policies, not only at the State level, but also by the Centre.

    I am, however, no economist, but am keen to understand what is going on!
     
  10. pmaitra

    pmaitra Moderator Moderator

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    Neither am I an economist, but it is quite obvious to me that the anti-industrial policies of the state is causing industries to choose better opportunities in other states, and all WB is left with is low paying jobs. The exodus of the educated started decades ago and the state is left with only those whose subsistence is predominantly agrarian. Being in the state they can also vote while those who have left the state have no say in the matters. Recent election results reflect that. The state is in a vicious cycle.
     
  11. Mad Indian

    Mad Indian Proud Bigot Veteran Member Senior Member

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    thank gods that lefties dint come to power in India in absolute majority....
     
  12. Ray

    Ray The Chairman Defence Professionals Moderator

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    That is absolutely correct.

    However, what do you make of this?

     
  13. Kunal Biswas

    Kunal Biswas Member of the Year 2011 Moderator

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    I am spending my money well, I don't know about others..

    Oh.. Wait, you meant the West Bengal government..



    Title misleading hence corrected..
     
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  14. pmaitra

    pmaitra Moderator Moderator

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    Looks like Mr. Singhvi is confused.
     
  15. mayfair

    mayfair Elite Member Elite Member

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    Just two questions:

    What exactly is the point behind starting this thread?

    What is it doing here?
     
  16. Ray

    Ray The Chairman Defence Professionals Moderator

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    Maybe to prove that Bengalis are nuts and whiners!

    Like the actual Shewag, this too has hit an over-boundary! ;)

    Nothing wrong.

    We are excitable chaps, but then we also can take things in our stride.

    We also love to have fun and a bit of ribbing too!

    But this side is conveniently forgotten.

    Enjoy!

    Nothing should get under the skin!
     
    Last edited: Feb 18, 2012
  17. sehwag1830

    sehwag1830 Tihar Jail Banned

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    My point is Bengal is not promoting any industry in their state. And yet they want money despite India having huge public debt. Isn't this called entitlement ? No state has played as much politics as Bengal when it comes to industrialisation and promoting fdi
     
  18. Ray

    Ray The Chairman Defence Professionals Moderator

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    Correct.

    What is to be done with Bengal?

    Why was it not checked when it was merrily making a mess of itself and, in turn, India?
     
  19. Iamanidiot

    Iamanidiot Elite Member Elite Member

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    That is upto Bengalis themselves
     
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  20. sehwag1830

    sehwag1830 Tihar Jail Banned

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    I am not against Bengali. But this arrogance is costing their state and in turn entire nation.

    Read this article
    Fear factor

    I mean look at this attitude.
     
  21. Iamanidiot

    Iamanidiot Elite Member Elite Member

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    There are many thing about Bengali and the Bengali bhadralok attitude and ideology I find disgustiong.But as they are our countrymen we can only hope they realize their idiocy and reform.Bengalis are stuck in 1920-1947 while the present is 2012
     
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