When fresh money is print ed it first should be added t o t he Cent ral bank’s chest s.
A] The value of C1 and K increases in cent ral bank account Funct ion 12
When bank need physical money, t hen t he equalling digit al money from it s Capit al [M ] should be t ransferred t o Cent ral bank. The physical money from t he chest of Cent ral Bank w ill be release t o t he bank w hich t ransferred digit al money t o t he cent ral bank
B] Then t he values of C1 decreases and t he values of D1 increases in Cent ral bank account
C] The value of C increases in Bank’s account and t he values of Bank’s M decreases. But t he t ot al money supply [K], in t he bank w ill remain t he same. The physical money can also int erchanged bet w een t he different banks w it h digit al money.
Not e-
Every bank branch should have it s ow n ATM in it s bank’s premises. At t he rat io of one bank branch for every 2500 people t here w ould be 500000 lakh bank branches and ATM s in t he count ry.That means t here w ould be a bank branch and ATM in every village and a colony in urban areas. So t here w ould be no need t o maint ain separat e ATM s out side bank branch premises. This branch should maint ain money in it s ow n ATM . The deposit ed money at t he branch should be used t o cash w it hdraw als and money replenishment in t he ATM . If t here is short age of money at any bank branch, it s head bank should adjust money t o all it s branches. No t hird part y should be given job of put t ing money in t he ATM ’s.
Once banks are est ablished at t he rat io of one branch for every 2,500 people and all cit izens are given M ain Savings Account s, t hen all Direct and Indirect t axes w ill be abolished.
Ultimate Tax Reforms - All Direct and Indirect taxes accompanied by tax law s, accounting, auditing and tax returns, can be abolished if a new tax system called “TOP Tax system” is adopted and implemented by all nations. Ultimate Tax reforms w ill relieve 7 billion people of the w orld from the cobw eb of ambiguous and complex tax structures, plethora of tax law s, mandatory and cum bersome accounting, auditing, tax returns and consequent quagm ire of all tax related cases.
Salient features of this new tax system
...1] Taxation, tax collection, tax enforcement, tax compliance, allocation of revenues to various ministries or departments and money supply into the economy are unified and integrated in the banking system.
2] In this new tax system there w ill be no Direct taxes, Indirect taxes, tax law s, tax returns, tax collection departments, tax enforcement agencies and tax tribunals.
3] Citizens need not maintain separate account books and submit tax returns annually for paying either Direct taxes on personal incomes or Indirect taxes w hile running business or industry.
4] Yet, the tax revenues collected by banks from single tax called TOP Tax w ill be 30 to 40% more w hen compared to total tax revenues accrued from all taxes in the present tax system.
5] TOP Tax system” w ill make budget preparation of any country to be simple, easy and time saving exercise.
6] 100% tax collections w ithout tax collection departments
1. Tax structure and direct benefits of the suggested TOP Tax system Tax structure of suggested TOP Tax system
Present system capit al gains t ax w ill be account basic and t ot ally avoidable unlike individual basic and compulsory in t he present syst em. For clear underst anding please see t able number 1 and 2 in page number 6 and 7.
Profit taxmeans it w ill be imposed on person’s incomes (if remained any) earned/ got t hrough salary, remunerat ion, business, indust ry, donat ions and gift s after liberally used on expendit ure/ spending, various invest ment s, gift s and donat ions. That means, profit t ax w ill be imposed only on unspent or save small scale and domest ic indust ries respect ively. Similarly t he excise duty on liquor and w ines can
be levied by t he St at e government s as under t he present syst em t o inhibit heavy consumpt ion and addict ion.
Direct benefits of the suggested TOP Tax system Under proposed TOP Tax system there w ill be no Income Tax and other Direct taxes.
Benefits:
So under suggest ed TOP Tax syst em, people w ho have t axable incomes got from salary/
remunerat ion/ professional income/ donat ion/ gift / service/ business/ indust ry w ill benefit as t hey need not pay Income t ax/ ot her Direct t axes and submit Income Tax ret urns annually. 7 billion People of t he w orld w ill be unshackled from all Direct taxes, tax law s, tax raids, tax returns, accounting and auditing.
Under suggested TOP Tax system there w ill be no Sales Tax (VAT), Central Excise Duty (CENVAT), Service Tax and all other Indirect Taxes.
1. M arkets w ill be fully open w ithout any hurdles like multiple taxes, permits, licenses, w ay bills, accounting, auditing, tax returns and tax law s. Traders, manufacturers, transporters, dealers, retailers, vendors, contractors, service providers and all others w ill not need to maintain account books, sales lists, stock lists, w ay bills etc. No accounting, auditing and tax returns w ill be required for individuals w ho run business or industry. The present day trade barriers betw een manufacturers and consumers; betw een the States w ithin the country and betw een the nations can be totally removed.
2. Therefore all the check posts, w ithin a TOP Tax system” implemented country, can be totally removed allow ing free movement of industrial goods/ commodities and agriculture produce from anyw here t o anyw here in that country and benefitting all farmers, manufacturers, traders and more importantly the consumers.
3. The entire truck ow ners w ill benefit as they need not pay bribes at check posts. They need not carry w ay bills w hile transporting industrial goods and agriculture produce from one place to another place in that TOP Tax system implemented country.
4. The entire farming community w ill benefit as they can transport their agriculture produce from anyw here to anyw here and sell their produce at market prices.
5. There w ill be no tax collection expenditure for the Governments and no tax compliance costs for the people. Yet, the tax revenues from single tax (TOP Tax) w ill be 30 to 40% more than the total revenues presently accruing from all Direct and Indirect taxes collected by multiple tax collection departments at huge expenditure for both States and Centre combined.
6. The tax component on any commodity, product or service w ill be less than 11% w hile the average tax component is more than 35% in the present tax system.
7. There w ill be absolutely no scope for tax evasion and it’s by products namely black money and corruption.
Aft er est ablishing sufficient number of banks/ service cent res by t he Government (for example, India) w it h t he help of privat e sect or banks and financial inst it ut ions, all t he cit izens above age of 15 years should be asked t o open M ain Savings Account in any bank branch and deposit all t he currency not es of 1000, 500, 100 and 50 rupees except 20, 10, 5, 2 rupee not es/ coins, available w it h t hem in t hese banks in t heir new ly given M ain Savings Account (M SA) or Sub Savings Accounts (SSA) w it hin a st ipulat ed t ime of 30 days. All present ly run savings account s and current account s should be convert ed in t o Sub Savings Accounts (SSAs) w it h his/ her same M SA account number [except t he eight and t he nint h digit s] and can be operat ed from t he same banks. Similarly, people w ho have money in
t he fixed deposit s/ FDRs w ill have t o t ransfer all t heir money from t hese fixed deposit s/ FDRs t o t heir respect ive new ly given M SAsor new ly opened/ convert ed SSAs w it hin t he same st ipulat ed period of 30 days.
Aft er t his grace period of 30 days, t he Government (for example, India)needs t o demonetiseall not es of denominat ion 1000, 500, 100 and 50 rupee not es except 20, 10, 5, and 2 rupee not es.