Digital India - a model developed by Varma
Varma, Vijaya Krushna Varma
TOP TAX
2009
Online at https://mpra.ub.uni-muenchen.de/58160/
MPRA Paper No. 58160, posted 30 Aug 2014 16:26 UTC
Digital India – A model developed by Varma
Banking structure is redesigned to make India a fully digital nation and to usher in 100% E-governance.
M ulti dimensional and multipurpose savings account
- It is the main keel of this restructured banking.Purpose of this multi dimensional account
1. This savings account can be used for receiving, storing and spending of money.
2. It can be used for buying, selling and holding property rights of immovable properties like lands, plots, flats and commercial establishments.
3. It can used for buying, selling and holding properties rights of movable properties like vehicles, gold etc.
4. It can used for buying, selling and holding shares
5. It can be used for getting driving license, passport, birth certificate, voter ID card, ration card, pension, relief funds, subsidies, and compensation.
Application of this new restructured banking system:- Banking is expanded so that taxation, tax collections, tax enforcement, tax compliance, registration departments, pass port offices, land registration departments, vehicle registration departments, share transactions, Public distribution system, census department, revenue department can be unified and integrated in this new banking system.
Salient features
Fully liberalised and self regulating banking sector
1. Automatic adjustment of money supply in banking system w ithout any external regulators 2. No external regulators needed to control inflation and deflation.
3. Portable savings account. Customers can shift their accounts w ith same account number from one bank to another bank at any time w ithout need for closing their accounts in the past bank and opening in the new bank.
4. Portable savings account number. It is valid, active, permanent and portable during his/ her entire life period from the time it w as given and upto his/ her death.
5. No non-performing assets [NPA]
6. Loans can be sanctioned w ithin 5 minutes w ithout need for documents, encumbrance certificates, legal opinions, mortgages.
7. Easily distinguishable real money and loan money
8. No common financial year for all accounts. Financial year of an account begins on the day it opened. There w ill be no need to submit annual tax returns. All accounts are involuntary taxpaying accounts.
9. Banks w ill only handle citizens’ savings accounts. The banks are handlers of savings accounts and they do not ow n them.
10. M oney, in this restructured banking, does not have storage value. It w ill have only transaction value. That means there w ill be no interest rates on demand deposits and fixed deposits. M oney w ill have no depreciating value. In fact Rupee’s value is constant and permanent for eternity.
11. Total values of money supply, physical money, digital money, loans/ advances in the entire banking system can be know n at any point of time.
12. Accounting in single monetary unit values w ithout decimals/ paisa. All accounts show in single monetary unit i.e. rupee.
13. By using this restructured banking system, single phase election on single day can be held throughout the country. No rigging, no impersonation of voting and no electoral mal practices can be possible in this new banking structure.
14. Electoral rolls/ voter listed can be prepared and supplied to Election Commission by banks w ithin one hour. These voter lists get updated at every second.
15. 100% accountable and transparent governance 16. No bankruptcy of banks
17. No third party or agencies required to deposit cash in the ATM s.
18. Economy can be run on limited paper currency. 99.4% of total money supply w ill be in digital form and only 0.6% of total money supply w ill be in physical form in Rs 50, Rs. 20, and Rs. 10 notes apart from 50 paisa and 25 coins.
19. Fixed CRR at 10%. It is permanent and there is no need change from time to time.
20. Fixed PLR at 3@ per annum up 10 lakhs and at 4% per annum on loans above 10 lakhs.
21. M ain savings account in this new restructured banking system is an involuntary taxpaying account just like respiratory system in human body. No tax returns, accounting and auditing required.
22. Banks’ profits can be know n at every day, every hour or even at every minute.
23. There w ill be no vacancy for cheating chit fund companies in this restructured banking system.
24. Easier and quicker liquidity of all assets that belong to a person or organisation into cash w ithin minutes.
Advantages of M ulti dimensional savings account
Every bank branch w ill become an E-Seva centre.
1. Vehicle registrations and the transfer of ow nership rights of vehicles can be made at any bank branch w ithin 5 minutes. No regional transport offices are required.
2. Registration of properties like lands, flats, plot s and all immovable assets can be made at any bank branch. Registration for selling/ buying of properties can be made w ithin 5 minutes. No registration departments are required.
3. There w ill be no tax collection expenditure for the Governments and no tax compliance cost for the people.
4. 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.
5. There w ill be no check posts, w ay bills, accounting, auditing, tax laws, tax raids, etc
6. Electoral rolls can be available at banks at any time as and w hen required by Election commission.
The electoral rolls w ill get updated constantly at every second in banks.
7. Exact population figures can be available at every second.
8. Birth certificates, death certificates, rations cards, can be got at any branch w ithin five minutes 9. People can get passports at any bank branch w ithin five minutes.
10. Selling/ buying of shares can be done at any bank branch.
11. There w ill be no multiple selling of the same property to different people and unauthorised selling/ purchase and illegal occupation of other person’s property w ithout his/ her know ing/ consent w ill not be possible.
12.Total elimination of black money, fake currency, corruption and money laundering
13.Out of total money supply 99.4% w ill be in digital form and only 0.6% of total money supply w ill be in physical form.
2...M ethod of Implementation: Basic model (India)
* The government should build t he basic infrast ruct ure [building premises and int ernet connect ions]
for providing banking service for every village/ suburb/ t ow n or colony having a populat ion of around 2500 w it h t he help of privat e sect or banks and inst it ut ions
* Banking licence should be liberalised.
* Banking licence should be given t o any promot er or inst it ut ion t hat has capit al invest ment of minimum one t housand crore rupees. The qualificat ion t o st art banking business should be a minimum capit al invest ment of 1000 crore rupees.
* Banks should be allow ed t o handle bank account s w hose cumulat ive t ot al money should not exceed 18 t imes t he bank’s ow n capit al money.
* Banks should be allow ed t o sanct ion loans up t o 9 t imes t he value of it s capit al money but not more t han t he 47.37% of t he value of [t ot al money in all account s it handles + it s ow n capit al money].
*
[For example if a bank has 1000 crore has it s capit al money, t he t ot al money it w ill be allow ed t o handle from all it s account s is 18000 crore rupees. So w it h t he capit al of 1000, t he t ot al money t he bank can handle is 1000+18000= 19000. Wit h t his t ot al money supply t his bank handles, t he loans sanct ioned by t his bank should not exceed t he value of 47.37% of 19000crores] = 9000. Wit h t he 1000 as it capit al money, t he maximum level of t his bank’s money handling capacit y of 19000 crores = 9,000 loan money + 10,000 crore real money]. As t he bank’s capit al money increases it s money handling and loan sanct ion capacit y w ill increase correspondingly.* Banks should not be allow ed t o use or w it hdraw it s capit al money by its promot ers for any purpose ot her t han paying salaries, st at ionery or ot her running or operat ing cost s of t he bank.
* There should be one bank branch for every 2500 people. That means t here should be a bank branch in every village or colony w it h a populat ion of 2500 people. India need 5,00,000 bank branches and minimum of 15 lakh bank employees.
* The government should bear ent ire cost of t he rent al charges, int ernet charges and current charges of bank branches sit uat ed in rural areas t o promot e est ablishing bank branches at t he rat io of one branch for every populat ion 2500 t o 3000 people.
In t his new banking syst em t here w ill be t hree t ypes of account s. The t hree t ypes of bank account s are called
1 M ain Savings Account [M SA],
2 Sub Savings Account [SSA]and
3 Corporate Account Number.* Every bank should have comput ers t hat should be capable of t aking biomet ric input s [finger print images and iris images] for opening new savings account s. The collect ed biomet ric dat a of iris and finger print s of an individual w ill be encrypt ed and sent t o t he dat abase in t he servers of super comput ers at RBI. Using t his encrypt ed biomet ric dat a, a M ain Savings Account number [M SA] w ill be generat ed at t he server maint ained by t he RBI. If t he user t ries t o provide t he same biomet ric t o open anot her account in t he same branch or anot her branch anyw here in t he count ry, t he main server should be able t o ident ify and reject t he new account generat ion for t he same individual. There should not be mult iple generat ions of account numbers w it h an individual’s same biomet ric dat a [finger print s and iris]
*
It should be made mandat ory for every cit izen above t he age of 15 years t o t ake a M ain Savings Account in any bank branch.7. The server should have t he capacit y t o handle 150 crore individuals’ dat a and be able t o handle 1500 crore t ransact ions every day.
*
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 s at any bank w it hin 30 days w it hout need for any init ial deposit s. It can be opened w it h zero balance. Indians, w ho reside out side India, should be given six mont hs t ime t o open M ain Savings Account at any branch in India. All t hese bank branches are connect ed t o cent ral servers. No second generat ion of M ain Savings Account number of any person w ould be possible w it h t he same dat a of his/ her finger and iris images. There aft er no new M ain Savings Account should be given t o any individual. From here aft er anyone w ho does not have M ain Savings Account should be deemed as illegal migrant .*
A person’s M ain Savings Account number w ill remain same for his/ her entire life time. He/ she can change the bank at any time but the account number w ill remain same. That means the M ain Savings Account number is portable, active and permanent during his/ her entire life period. These permanent M ain Savings Account numbers cannot be changed. These account numbers w ill become ceased or closed only upon death of the account holder.Usage of M ain Savings Account
Unlike savings account in the present banking system, this M ain Savings Account consists of 5 sub accounts. It is a combinations of 1] money account 2] Land Savings Account[LSA] 3] movable property account (M PA) 4] Shares account(SA) 5] Personal account(PA).
The M SAshall be used t o deposit , w it hdraw , receive or pay salaries, professional fees, service fees, remunerat ions, donat ions, loans et c The M ain Savings Account (M SA) should also be used for buying of shares, land for agricult ure or indust rial purpose, plot s, flat s, gold, jew ellery, vehicles, commercial est ablishment s or any ot her movable or immovable propert y.M ain Savings Accountis also needed t o get driving licence, passport , vot ing right , subsidies, funds, mont hly rat ion, pensions, remit t ances and loans (personal, agricult ure, business, educat ional and indust rial) and for get t ing compensat ion/ exgrat ia/ relief funds in t he event of nat ural calamit ies like cyclones, eart hquakes, floods, famines, accident s, et c,
From here onw ards t his rest ruct ured banking syst em is called “ TOP TAX SYSTEM ”
At t he init ial launching of t his “ TOP TAX SYSTEM ” , all t he persons above t he age of 15 years w ill be given t he M ain Savings Account numbers. It should be mandat ory for every cit izen above t he age of 15 years t o have M ain Saving Account . Children below t he age of 15 years w ill be regist ered in t heir mot her’s or fat her’s or guardian’s or social w elfare minist ries’ or NGO’s account . From t here aft er every child w ill get M ain Savings Account once he/ she reaches 15 years of age. Alt hough t his account number is given and regist ered in t he mot her’s M ain Savings Account w it hin one mont h of child’s birt h, it w ill be act ivat ed and come int o live account only w hen t he child reaches 15 years of age as decided by t he Government . A person’s M ain Savings Account w ill become operat ional and st art funct ioning from t he age of 15 years as decided in t he part icular count ry. In case of orphans t he account numbers w ill be regist ered in t he social w elfare minist ries’ account s and it should be made
mandat ory for St at e Governments t o look aft er every orphan’s w ell-being and care t ill he/ she reaches t he age of 20 years and he/ she get s employment .
The 15 digit M ain Savings Account number w ill act as money savings account, movable property account, immovable properties account, shares account, citizenship card, taxpaying account, ration card, Pass port and voter identity card.
An example of M ain Savings Account numbe r –
210801101456789The first t w o digit s from left side 21 indicat e t he day, t he next t w o digit s 08 indicat e t he mont h and t he next t hree digit s 011 indicat e t he year w hen t he M ain Savings Account is issued t o t he person or his/ her birt h year. Alt hough t his account number is given and regist ered in t he mot her’s M ain Savings Account w it hin t hree mont hs of t he child’s birt h, it w ill be act ivat ed and become int o live account at t he age of 10 or 15 years as decided by t he Government. A person’s M ain Savings Account w ill become operat ional and st art funct ioning from t he age of 15 years. In t he case of orphans t he account numbers w ill be regist ered in t he social w elfare minist ry’s account and it should be made mandat ory for St at e Government t o look aft er every orphan’s care t ill he reaches 20 years and unt il he/ she get s employment . That means t here w ill be no st reet children and child labour.
The eight h and nint h digit s from t he left side [01] denot e t he main savings account . It is comm on for all M ain Savings Account s. The last six digit s 456789 are serial numbers of t he M ain Savings Account s.
That means on each day t he nine digit s from t he lef t side w ill remain same. The last six digit s from right side w ill be from 000001 t o 999999. The person can choose his/ her M ain Savings Account number from t he available numbers. Wit h t he change of dat e, mont h and year t he last six digit serial numbers w ill repeat . For every 999 years t he 15 digit M ain Savings Account numbers w ill repeat once again.
Once t aken/ given, t he M ain Savings Account number is permanent for his/ her ent ire life. From t hen he/ she can choose any bank t o maint ain and operat e his/ her M SA. As said earlier M SA is port able bank account . The M SA w ill cont ain 5 sect ions/ sub account s. A person’s money, immovable propert ies, movable propert ies, shares and family det ails w ill be maint ained in different sect ions/ sub account s of a person’s M ain Savings Account . The 5 sub account numbers of M ain Savings account are same except t he nint h digit . If t he nint h digit is 1, it is money account.
210801101456789
This number implies that21-08-011-01-456789
M ain Savings Account – M oney account Immovable propert y account – [lands, plots, flat s, commercial est ablishment s, buildings, houses et c., ]
M ovable Propert y Account [vehicles, gold]
Shares Account [SA]
Personal Account [family, passport , educat ion cert ificat es, rat ion card
[Dat e-mont h-year-M SA-serial number]
If t he nint h digit is 2, it is immovable propert y account . If t he nint h digit is 3, it is movable propert ies account . If t he nint h digit is 4, it is shares account .
If t he nint h digit is 5, it is family account . The overview of a M ain Savings Account
M ain Savings Account
210801101456789
210801101456789 T M oney Account (M SA)
210801102456789 T Immovable propert ies/
Land savings account (LSA)
210801103456789 T M ovable propert ies account [M PA]
210801104456789 T Shares account (SA)
210801105456789 Personal Account (FA)
The user name, profile pass w ord, logs in passw ord and t ransact ion passw ord are same for all t hese sub account s of a person’s M ain Savings Account . Thus t he M ain Savings Account is a mult i dimensional and mult i funct ional single savings account for st oring/ using money, for buying/ selling of shares, movable and immovable propert ies, for direct receiving of subsidies, pensions, relief funds, rat ions, scholarships et c., from t he Government . The main funct ions of M ain Savings Account are
*
M oney account is just like t he present savings account w here money w ill be st ored and used. M oney in flow s (credit s) and money out flow s (debit s) w ill be recorded in t his account . M oney can be used or spent t hrough cheques, debit cards, credit cards and online t ransfers only. There w ill be no demand draft s, pay orders and ot her means of conveyance for money. M oney flow s w ill be only in four forms.*
Buying, selling or mort gaging of immovable propert ies like lands, plot s, flat s, house, commercial est ablishment s et c., w ill be recorded in land savings account (LSA) of his/ her M SA, w hich is managed by banks. Purchases and selling of immovable propert ies w ill be done t hrough t his account by banks.*
Buying, selling and mort gaging of movable propert ies like vehicles and gold w ill be recorded in t he movable propert ies account (M PA) of his/ her M SA.*
Buying or selling of shares w ill be recorded in t he shares account (SA).*
A person’s personal account is used as a rat ion card, cit izenship card, vot er card, passport , driving license, hall t icket for all exams, CV and insurance policy.[B] Sub Savings Account (SSA)
Every cit izen w ould be allow ed t o open any number of Sub Savings Accounts (SSA) by using t he same M SA number, if he/ she w ishes t o operat e business or indust ry. He/ she can also use his/ her M SA t o operat e any business or indust ry. If he/ she runs many indust ries or business act ivit ies, t hen he/ she can open Sub Savings Account s t o run t hese indust ries or business cent res in mult iple places in t he
count ry. These Sub Savings Account numbers are also port able. People can change t he banks t o operat e t heir Sub Savings Account s at any t ime. Usually people, w ho run business or indust ry, w ill need Sub Savings Account s. Generally 10% (approximat ely) of t ot al populat ion of any count ry, w ho run business or indust ries w ill need Sub Savings Account s. Even individuals w ho do not run business or indust ry shall be allow ed t o open Sub Savings Account s. In Sub Savings Account s only money w ill be managed by banks.
An example of Sub Savings Account number
210801110456789
The Sub Savings Account number of a person is same as of his/ her M ain Savings Account except t he eight h and t he nint h digit s from left side. He/ she can choose Sub Savings Account numbers from 10 t o 99. The remaining 13 digit s w ill remain t he same as of his/ her M ain Savings Account number. That means t he Sub Savings Account s of a person are offshoot s from his/ her M ain Savings Account . He/ she can open up t o 89 Sub Savings Account s t o run mult iple indust ries or business act ivit ies locat ed at different locat ions. If he/ she needs more t han 89 account s t hen he/ she w ill have t o t ake Corporat e Account numbers. These Sub Savings Account s w ill be used t o maint ain money only.
The Sub Savings Account s (SSA) and also t he M ain Savings Account s (M SA) can be used for running business, indust ry, schools, colleges, hospit als, hot els, rest aurant s, const ruct ion, st udios, services, or any ot her t ype of business. Just like M SA, t he SSA can also be used t o receive or pay salaries, professional fees, service fees, remunerat ions, donat ions loans et c,
210801110456789 –This number implies t hat 21-08-011-10-456789 [dat e-mont h-year-SSA-serial number]
[C] Corporat e Account Numbers (CAN)
Corporat e account is a seven layer account – it is seven layer account s for 1] money operat ion, 2]
immovable propert y account 3] movable propert y account 4] shares account 5] man pow er account 6]
raw mat erials account 7] finished product s account
Corporat e account number - Finance account
Immovable propert y account-
100801101001345 M ovable property account -
200801101001345
Shares account -
300801101001345
M an pow er account [employees] -
400801101001345
Raw mat erials account -
500801101001345
Finished product s account -
600801101001345
Under proposed TOP Tax syst em t he account ing and audit ing of t he corporat e or public companies w ill be mandat ory and compulsory as in t he present syst em for prot ect ing t he int erest s of t he invest ors. Corporat e or public companies, w hich issued share t o public, w ill be given Corporat e Account Numbers (CAN).
An example of Corporat e Account number
000801101001345
The first t w o digit s from left side are zeroes in all Corporat e Account Numbers. The next t w o digit s 08 indicat e mont h and t he next t hree digit s 011 indicat e t he year of t he account number t aken. The eight h and t he nint h digit s 01 indicat e t he indust ry or sect or codes. The next t hree digit s 001 indicat e t he product code and last t hree digit s 345 are serial numbers of indust ries regist ered in t he same mont h. In t he same mont h, t he last t hree digit s w ill repeat many t imes [possible 99,999 t imes if need]
for different sect ors/ indust ries and for different product s. 0008011101001345 This number implies t hat 00-08-011-01-001-345 [00-mont h-year-indust ry code-product code-serial number]
Corporat e Account number
000801101001345
000801101001345 M oney Account
000801101001345 Immovable propert ies/
Land savings account (LSA)
000801101001345 M ovable properties account
000801101001345 Shares account (SA)
000801101001345 M an pow er account
000801101001345 Raw mat erials account
000801101001345 Finished product s account
The corporat e or public companies w ill have t o operat e all cash t ransact ions t hrough t he Corporat e Account Number (CAN) only.
An example of Cent ral Government account number 222222010013456
In all Cent ral Government account s t he first six digit s 222222 from left side are t w os. The next t w o digit s 01 indicat e minist ry code. The next t hree digit s 001 indicat e depart ment or inst it ut ion code and t he last four digit s 3456 indicat e serial numbers.
An example of St at e Government account number
333301010013456
In all St at e Government account s t he first four digit s 3333 from left side are t hrees. The next t w o digit s 01 indicat e St at e code. From 01 t o 99 t he numbers are St at e codes. The next t w o digit s 01 indicat e minist ry codes. The next t hree digit s 001 indicate depart ment or inst it ut ion codes and t he last four digit s 3456 indicat e serial numbers
.
An example of Bank [Financial inst it ut ion] account number 999000001456789
456789 is t he bank [Financial inst it ut ion] account number and 000001 is one of it s branch code numbers.
For all bank account s t he first t hree digit s are 999. The last five digit s 456789 are bank account numbers. The banks can choose t heir account numbers available at t he t ime of regist rat ion from 000001 t o 999999. The middle six digit s 000001 are t hat part icular banks’ branch code numbers. The bank can allot any code numbers from 000001 t o 999999 t o each of it s branches.
Banks [financial inst itut ions] operat e M SAs, SSAs and CANs as long as t he account holders w ant . But t hey w ould not ow n t hese account s. These account s are port able and can be shift ed from any bank t o any bank at any t ime.
Usage of M SAs, SSAs and CANs:-
In t he present economic syst em a person’s or a company’s money, movable or immovable propert ies(like vehicles, plot s, flat s, houses, fact ories, commercial est ablishment s, lands et c.,) shares, family t ree, insurance policies and all ot her asset s are recorded, managed and handled by different depart ment s, agencies or inst it ut ions.
But in t he suggest ed TOP Tax syst em each individual above t he age of 15 years w ill have one M ain Savings Account consist ing of five folders. M oney, movable or immovable propert ies (like vehicles, plot s, flat s, houses, commercial est ablishment s, lands et c.,) shares, family t ree, insurance policies et c., are recorded, managed and handled in a single account called M ain Savings Account (M SA) w ith five folders in case of individuals and in Corporate Account Numbers (CAN) w ith seven folders in case of companies w hich issued shares for public. These accounts namely, M SAs, SSAs and CANs w ill be maintained and operated by banks replacing different departments, tax collection and tax enforcement boards, agencies or institutions of the present economic system.
Thus people’s money, shares, all movable and imm ovable propert ies w ill be in only one account (M SA) w it h different folders operat ed by banks.
1. Usage of M ain Savings Account (M SA)
- There w ill be only one compulsory and mandat ory M SA for each person given by t he Government . This M SA w ill have five sub account s for each specific purpose of an individual.The first sub account (M oney account) w ill be used for st orage and usage of money got t hrough savings/ earnings/ incomes/ donat ions. This M SA can also be used t o run or operat e any business or indust ry ow ned w holly by an individual.
The second sub account
(
Land Savings Account/ LCA) shall be used for regist rat ion, st orage and usage of ow nership right s of all immovable propert ies like lands, flat s, plot s, commercial est ablishment s, and et cet era. The ow nership right s of t hese asset s w ill be t ransferred from oneperson’s LSA t o anot her person’s LSA w hile purchasing/ selling/ donat ing of t hese immovable propert ies.
Vivid explanation: - Land Savings Account/ LCA In t his suggest ed TOP Tax syst em t he Land Savings Account of each person shall be ut ilised as t he de-mat account of t hat person’s ow nership right s of immovable propert ies like lands, plot s, flat s, asset s, fact ories and ot her est ablishment s in t he ent ire count ry. While purchasing or selling, t he t ransfer of ow nership right s of t hese asset s/ propert ies from one person t o anot her person shall be made from one person’s LSA t o anot her person’s LSA t hrough banks/ service cent res. So t he t ransfer of asset s like lands, plot s, flat s, st ruct ures and ot her est ablishment s w ill t ake place in physical form upon t he t ransfer of ow nership right of t hat asset in digit al form from one LSA (seller) t o anot her LSA (buyer). TOP Tax syst em suggest s t hat t ot al land record of t he count ry should be demat erialised according t o ext ent , locat ion, mapping and ow nership.
The land belongs t o people w ill be recorded in t heir respect ive LSAs. Similarly t he land t hat belongs t o Government , Government organisat ions, companies should be recorded in t heir respect ive account s.
Repeat;- Under the TOP tax system the purchase of lands, plots, flats or other properties should be made through Land Savings Account (LCA), the sub account of M ain Savings Account (M SA) operated by banks. If any person buys land, plot, flat or any ot her property anyw here in India the extent and nature of the property w ill be credited in his Land Savings Account and the same property w ill be debited from the seller’ Land Savings Account (LSA). W henever he/ she sells any property that is credited in his LSA, the same w ill be debited from his/ her Land Savings Account and the same property w ill be credited in the buyer’s Land Savings Account (LSA). The credit in the LSA means purchase of immovable property and debit means selling of immovable property. The immovable properties w ill be in dematerialised form and the ow nership rights can be transferred from one account to another account just like money transfers and shares. Just like shares there w ill be no paper documents for properties. Unlike cash transfers the buyer’s presence and signature/ authentication shall also be needed for any property transaction. A bank statement of the second folder (LSA) of any person’s M ain Savings Account w ill hold the entire ow nership rights of that person’s all immovable properties in the entire country. The People can get these bank statements of their properties at any time at banks in addition to w eekly, monthly or yearly statements by post or e-mails or both. They w ill get phone messages and email statements immediately after each property transfer.
There w ill be no multiple selling of the same property to different people and unauthorised selling/ purchase and illegal occupation of other person’s property w ithout his/ her know ing/ consent w ill not be possible.
Advantages of Land Savings Account:- 1. Land ceiling act
In the present system rich people are having huge tracts of agriculture lands in different districts and States making mockery of the land ceiling act. The registrations of lands, flats, plots and other properties are being made by the registration departments and land records are maintained by revenue departments.
In the TOP Tax system land ceiling act can be strictly enforced on individuals and no individual can have more than 20 acres of land in the entire country. Every individual w ill have only one M ain Savings Account consisting of separate sub account called Land Savings Account for all immovable properties like lands, plots, flats, etc., All immovable properties, situated w herever in the country, along w ith all details of Survey numbers, boundaries, description, nature, map, geo location, village, district, state, extent and date of selling/ buying of each property of each person w ill be recorded and maintained in Land Savings Account (LCA).
The Land Savings Account w ill be operated and maintained by banks just like money savings accounts. Debits and Credits of all properties w ill be made in the Land Savings Account w hile a person buys or sells his property. The total extent of land recorded in all Land Savings Accounts belonging to people, Governments, departments, organisations, companies, institutions etc., w ill remain exactly the same even after countless number of debits and credits each day. The Land Savings Account w ill show an individual’s exact ow nership rights of his/ her all immovable properties. The total land extent in each Land Savings Account w ill never cross the upper limit of 20 acres (as envisaged in TOP Tax system) strictly adhering to land ceiling act. There can be absolutely no multiple selling of same property t o different people. It w ill become impossible for any individual to ow n huge extent of lands (beyond land ceiling act) under different names in different locations of the country. TOP Tax system ensures that the land ceiling act can be implemented in totality to perfection making Government’s task easier in pushing forw ard land reforms and allocating land to landless poor.
There w ill be no paper documents for all movable and immovable properties. Hence no separate registration and revenues departments are needed in the suggested TOP Tax system. Only land survey department w ould suffice to mark and clear boundary disputes.
2. Farm subsidies; - In present system 90% of total farm subsidies are being gobbled up by rich farmers (10%), w hile the small and marginal farmers (90%) are getting only 10% of total farm subsidies. This anomaly can be totally checked in TOP Tax system w here Land Savings Account is a sub account of M ain Savings Account operated by banks. According to records in Land Savings Accounts, the t otal farm subsidies (100%) w ould reach the small and marginal farmers w hile keeping aw ay rich farmers from all subsidies. Here rich farmers means industrialists, contractors, professionals, celebrities, individuals, politicians, business class, salaried class (govt or private) etc., w hose annual incomes are more than 2,00, 000 (other than agriculture income).
3. Farm loans; - In the present system getting farm loans by farmers is cumbersome, laborious, time consuming and bribery ridden exercise. Farmers need to go from one department to another department to get land documents, evaluation and encumbrance certificates, revenue certificates etc., after paying heavy bribes. Farmers are being forced to take loans from private lenders w ho charge high interest rates.
But Land Savings Account w ill make money borrow ing by farmers from banks so much easy, instant, smooth, timely and time saving exercise. By using Land Savings Accounts the branch managers can sanction farm loans instantly based on land records in the LCAs.
4. Interest rates on farm loans
In the suggested TOP Tax system the interest rates on farm loans, up to Rs.10, 000, 00, w ill be only 2% per annum and 4% per annum beyond Rs. 10,000,00.
5. Land acquisition and compensation;- If an individual or company acquires land of more than 20 acres of land for industry, studios, real estate or any other purpose, land tax of 10,000 per acre per annum needs to be levied. If land is acquired for SEZs the farmers should be paid not only the market price of the land but also Rs 1,000 per acre per month for rest of his/ her life and thereaft er to his/ her legal heir. It is easier for local panchayats, municipalities, corporation to collect house tax, vacant plot/ land tax and properties tax as all the details of a person’s properties are recorded in his/ her Land Savings Account (LSA).
6. Land transfer/ registration/ stamp duty;- Under the “TOP Tax system” there w ill be no stamp duties on all immovable properties The registration charges for purchasing any property i.e.
land, plot, flat, house or other commercial establishments w ill be same and equal all over India irrespective of the place and market value of property. The registration charges w ould be only Rs.
1,000 per acre, Rs. 1,000 per 300 square yards of plot or Rs 1,000 per 1000 square feet of flat and multiples thereof. These registrations of land transfers can be made in any bank and anyw here in India. It is needless to say that the loss of stamp duties w ould be compensated by the “TOP Tax”
w hich is compulsory on any money transfers. If a person buys a property (land, plot, flat, house, commercial establishment) for Rs. 10 lakhs, a TOP tax of Rs. 40,000 w ill be deducted from his M SA or SSA w hile transferring the cash to the sellers account. If he/ she buys the same property for Rs. 1 crore the deducted TOP tax w ill be Rs. 4 lakhs. In the case a person transfers a property as a gift to his/ her son/ daughter or any other person, trust or organisation the TOP tax deducted w ill be nil as there is no cash transfer made. That means there w ill be no need for separate registration and revenue departments for registrations and handling of all immovable properties.
The third sub account of M SA(movable property account)shall be ut ilised for ow nership right s of all movable propert ies like vehicles, gold, jew ellery, and et cet era. The ow nership right s of t hese propert ies w ill be t ransferred from one person’s M SA (manufact urer, dealer, and seller) t o anot her person’s M SA w hile purchase/ sale/ donat ion of t hese movable propert ies. The ow nership records w ill cont ain t he vehicle’s model, manufact uring dat e, engine number, chassis number, regist rat ion number, fit ness cert ificat e et c. The ow nership right s of all vehicles w ill be t ransferred from one M SA belonging t o manufact urer/ import er/ dealer/ ret ailer, or ot her cit izen t o t he buyer’s account t hrough online just like money transfers in the present system.In t he TOP Tax syst em people w ill not need t o have separat e vehicle regist rat ion cert ificat es, fit ness cert ificat es, and insurance cert ificat es for each vehicle he/ she ow ns. The bank st at ement of t he t hird folder of his/ her M SA, w hich cont ains t he ow ning record of all his/ her vehicles, w ill suffice for all his/ her vehicles. That means the bank statement of the sub account (M PA) of any person’s M ain Savings Account w ill hold the entire ow nership rights of that person’s all movable properties. Furt hermore t here w ill be no need t o have separat e RTO depart ment s for regist rat ion and checking of vehicles in t he TOP Tax syst em. The t raffic police depart ment w ill suffice t o oversee all vehicles in prompt ly paying t he road t axes and insurance premiums regularly. The dat a on payment of road t axes collect ed from banks w ill ensure t hat t he checking aut horit ies can st op only t he non t ax- paying vehicles leaving t he t ax paid vehicles unst opped on t he highw ays.
Similarly t he gold in t he ent ire count ry, ow ned by people, import ers, dealers, sellers, Government s, t emples, companies, organisat ions, w ill be recorded in sub account (movable propert y folder/ M PA) of M ain Savings Account . Upon t he launching of TOP Tax syst em people should regist er t he gold t hey ow n in t heir t hird folder of t heir M ain Savings Account w it hin t he st ipulat ed t ime period of one mont h or more or as decided by t he Government . Aft er t his st ipulat ed t ime period no individual w ill be allow ed t o regist er his/ her gold. From hereaft er w hen one person buys gold t he ow nership right s of t he bought gold in seller (import er/ dealer/ ret ailer, or ot her cit izen) w ill be t ransferred from his/ her M SA t o t he buyer’s account t hrough online just like money transfers in the present system. So t he ow nership right s of gold w ill be t ransferred from one M ain Savings Account t o anot her account (import er, dealer, seller or bet w een people) on each purchase or selling of gold. Gold loans w ill be given on t he records of an individual’s gold ow ning in his/ her M ain Savings Account (t hird sub account ) and gold’s physical mort gage. It w ill not be possible eit her t o mort gage or sell gold w it hout ow ning record in his/ her M SA.
That means t here w ill be no possibilit y of st ealing gold because t he t hief cannot sell t he st olen gold w it hout t he ow ning record in his/ her account . A person cannot complain t he t heft of his/ her gold more t han t he recorded gold in his/ her account . Similarly w hen law enforcement agencies raid a person’s house and find gold beyond t he recorded gold in his/ her account it w ill be deemed as eit her st olen or bought from illegal means. People, w ho bring gold f rom abroad on ret urn, should record it in t heir M ain Savings Account at t he airport it self. The exact gold reserve ow ned eit her by people or
Government s w ill be know n at any t ime. Every year t he import ed and locally produced gold w ill be added t o t hese reserves.
The fourth sub account (shares/ stocks folder) shall be ut ilised for st orage and usage of ow nership right s of shares/ st ocks, bonds, derivat ives et c. The ow nership right s of t hese securit ies w ill be t ransferred from one person’s M SA t o anot her person’s M SA w hile buying/ selling/ donat ion. The shares w ill have only ow nership right s and called as semi solid money.
The fifth sub account (personal account) shall be ut ilised for family det ails and called as personal account . M arriage regist rat ion and child birt h regist rat ions w ill be made bot h in husband and w ife’s family folders of M SAs. Based on t he det ails in t he family folders, mont hly rat ions w ill be comput ed and t ransferred every mont h, in t he form of cash, direct ly int o t he w ife’s M SAs. Every child w ill get his/ her ow n M SA account at t he age of 15 years. The bank st at ement of The fifth account (personal account) of M SA of any individual can be utilised as income certificate, voter list, ration card driving license and passport. It can be obtained w ithin minutes from any bank and from anyw here in the country. People need not pay bribes to get these certificates or documents from revenue department and passport offices. All funds allocated tow ards w elfare of SCs, STs and BCs can be transferred directly into the M SAs of these sections leaving no room for leakages, bribes and misappropriation of these funds.
Vivid explanation:- All t he det ails of a person’s occupat ion, educat ional qualificat ions, marriage, driving license, passport , his/ her life part ners name, children and t heir age et c, w ill be recorded in fift h sub account (personal account) of his/ her M ain Savings account. The parent s should regist er t heir child’s det ails in t he dat a record of t heir M ain Savings Account (M SA) w it hin t hree mont hs of t heir child’s birt h. Once t he child get s t he age of 15 years he/ she w ill aut omat ically get M SA. The t ot al care and w elfare of t he orphans should be t aken by t he St at e government s t ill t he child reaches t he age of 20 years. The pat het ic plight of st reet children and orphans w ill come t o an end once t he TOP Tax syst em becomes operat ional.
This syst em t ot ally and permanent ly checks t he ever increasing problem of illegal migrat ion from Pakist an and Bangladesh changing t he demographic proport ion of India t o an unimaginable level. Once all t he cit izens above t he age of 15 years are given t he mandat ory M ain Savings account (M SA) and t he TOP Tax syst em becomes fully operat ional, no adult w ill be given M ain Savings Account (M SA) t hereaft er. From hereafter every addit ional M ain Savings Account [M SA] w ill be an offshoot of an exist ing M SA belonging t o parent s or Government in case of orphans. There w ill be no quest ion of addit ional fresh M SA w it hout parent ’s exist ing M SA. Similarly exist ing M SAs w ill come t o cease upon t he deat h of individuals. All t he money, shares, movable and immovable propert ies recorded in t he five folders of M SA of t he deceased person w ill be t ransferred t o his/ her legal heirs or t o nominees regist ered in his/ her M SA account . The t ot al number of M SAs w ill increase every year depending upon t he grow t h rat e of populat ion of t hat count ry. TOP Tax syst em w ill record; maint ain every individual’s family record generat ion aft er generat ion. Therefore illegal migrant s from ot her count ries cannot ent er illegally int o India, get M ain Savings Account or Sub Savings Account s and assimilat e in Indian populat ion. It w ill be a lot easier for t he government t o det ect t errorist s and milit ant s w ho cross over from across t he border t o indulge in unlaw ful act ivit ies.
Preparation of voter lists- TOP Tax syst em makes t he preparat ion of elect oral roles t o be very easy and simple and inst ant . Fresh vot er list s w ill be provided by banks at any t ime if asked by elect ion commission. According t o t he addresses recorded in t he M ain Savings Account t he area w ise vot er list s can be supplied by banks t o conduct polls t o panchayat s, cit ies, dist rict s, M LA, M P and all ot her polls. If by polls are t o be held, t he last vot er list s should be used in t hat part icular const it uency in order t o st op people from ot her areas t o change t heir addresses t o t hat by poll areas.
TOP tax system w ill be operated solely by banks to provide different services for the Government like taxation, tax collection, tax enforcement; for issuing caste certificates, income certificates, voter lists, monthly rations, subsidies, pensions, calamity relief funds, passports, licences, fees reimbursements, scholarships etc., at absolutely free of cost. TOP Tax system, operated by banks, w ill also help people in getting all the above mentioned services at single w indow through their M SAs w ith five different sub accounts. That means TOP Tax system w ill replace present system’s multiple departments like Income tax department, Central Excise department, CBDT, CBEC, Tax tribunals, passport department, census department, States’ commercial tax departments, civil supplies departments, registration departments, revenue departments etc., saving thousands of crores of Government’s non-plan expenditure.
2. Usage of Sub Savings Account (SSA) :-
Every person can open and operat e as much number of SSAs as he/ she w ishes. The SSA is only a money account as in t he present syst em.This Sub Savings Account shall be used for receiving, st orage and usage of money t o operat e any
business or indust ry w holly ow ned by an individual.
3. Usage of Corporate Account Number (CAN): -
Corporat e companies, M NCs and Public limit ed companies w hich sold/ issued shares to the publicw ill be given CANs. Each Corporat e Account Number w ill have seven sub accounts for each specific operat ing/ running purpose of t he company.
The first sub account shall be ut ilised for receiving, st orage and usage of money for running of t hat company.
The second sub account [LSA/ land savings account] shall be ut ilised for having all records of immovable propert ies like land, buildings, infrast ruct ure and et cet era of t hat project / plant / business.
The third sub account [Immovable Property Account/ M PA] shall be used for regist rat ion, st orage and usage of ow nership right s for all f leet of vehicles and ot her movable propert ies like machinery et cet era required for running of t hat company.
The fourth Sub account [Shares Account ] shall be used for st orage of all shares of t he promot ers and t he public of t hat company.
The fifth sub account w ill cont ain t he det ails and account s of all t he employed manpow er of t hat company.
The sixth sub account [ Raw materials account/ RM A] w ill cont ain t he det ailed account s of all raw mat erials and ot her required input s bought and used for running of t hat company.
The seventh sub account [Products Account/ PA] w ill cont ain t he det ails and account s of all product s manufact ured, sales and invent ory. TOP Tax syst em’s CAN w it h seven sub account s is a new procedure t o see t hat company’s financial books w ere clean, accurat e, open and t ransparent t o all share holders so t hat t here can be no room for fraudulent and decept ive financial st at ement s.
Vivid explanation: -The TOP Tax syst em’s Corporat e Account Numbers (CANs), w hich consist s of 7 sub account s, w ill make all companies’ account s fully t ransparent and open t o all share holders every day (unlike quart erly, half-year and yearly st at ement s released by t he companies in t he present syst em) for inspect ion, st udy and analysis before invest ing t heir hard earned money in shares of t hose companies w it h sound financial posit ion.
M oney w ill flow into the first sub account of Corporate Account Number (CAN) w hen products are sold and money w ill go out w hen payments are made tow ards salaries, purchase of raw materials, services, equipment etc,. The seventh sub account, w hich records the manufactured products, gets updated online at every stage of production and marketing just like money savings account. The depletion of stock in the seventh account (products account) means the increase of money in the
money account (first sub account) on the selling of products. Similarly the decrease of raw materials in the sixth sub account means an increase of finished products in the seventh sub account. The increase of raw materials in the sixth sub account points to depletion of money in the money account (first sub account) on purchase of raw materials. All these seven accounts get updated online at every stage of construction, production and marketing show ing the exact details of debits and credits relating to money, raw materials, finished products, borrow ings, shares, etc., for the benefit of all investors w ho put their hard earned money into these companies. The total money, the value of raw materials, finished products, machinery, movable and immovable properties recorded in the seven sub accounts of any Corporate Account Number (CAN) minus the borrow ings is equal to the total strength of that company.
The TOP Tax syst em’s t ransparent account ing syst em in Corporat e Account Number (CAN) w it h seven sub account s for money, m ovable propert ies, immovable propert ies, manpow er, shares, raw mat erials and ot her input s, and manufact ured product s and invent ory w ill remove all frauds in account ing, securit ies, st ocks and invest ment . These CANs w it h seven sub account s ensure t hat t here w ill be no chance of fraudulent business pract ices of overst at ing profit s, concealing debt s, spreading t he expenses out over several years, under voicing or over voicing of raw mat erials, input s, and manufact ured product s, under or over st at ing of st ocks, padding up of project cost and divert ing of funds at grounding, const ruct ion, erect ion and all st ages of project implement at ion and publicat ion of falsified financial report s. The CANs of TOP Tax syst em can also check t he diversion of funds from one company t o anot her company w it hin t he group companies (same promot ers). The TOP t ax syst em gives a big boost t o st ock market s as people st art buying huge lot s of shares t o maint ain minimum balance in t heir account s in order t o avoid Profit tax. There w ill be no significant effect of TOP t ax syst em on int raday t rading and Fut ure opt ions t rading because t he looser looses ext ra 4% of t he loss amount only in t he int raday t rading. People w ill prefer t o buy shares on t he long t erm and annual yield basis. They invest in t he companies w hich give handsome dividends year aft er year.
Thus a country’s exact w orth of all its money, movable and immovable properties, shares, gold, ores and minerals w ill be know n exactly at any given point of time.
TOP Tax syst em insist s t hat t he ent ire nat ural resources of any count ry should belong t o people of t hat count ry. The t ot al know n reserves of all nat ural resources should be recorded demat erialise form in Government account s. The Government should sell ores or minerals t o mining companies at reasonable price in t erms of quant it y or t onnes inst ead of leasing out mines in t erms of ext ent or acres. Every t onne of ore or mineral mined should be paid by mining companies. The mining company w hich offers t he highest price per t onne should be given t he licence t o mine aft er paying advance payment for t he quant it y it w ant s t o mine. All t he mining companies should buy ore or minerals from Government s before st art of mining. The bought ore or mineral w ill be in demat erialised form and t ransferred from Government account t o mining companies’ CAN. Every t onne of mined ore or mineral w ill be account ed and t ransferred from one account t o anot her account i.e., from miner’s account t o user’s or export er’s account . The quant it y of ores or mineral recorded in t he Corporat e Account Numbers (CAN) get s deplet ed w hen used in t he product ion process or w hen export ed. The st ocks get increased w hen bought from mining companies or Governments. When a mining company sells or export s t he mined ore or mineral t o any ot her company t he t ransfer of right s of bought ore or mineral w ill be made online from t he mining company’s CAN (sixt h sub account ) t o t he buyer’s CAN. At t he same t ime money w ill be t ransferred from buying company’s CAN t o mining company’s CAN. Aft er t he deplet ion of t he recorded bought st ocks in t he CAN, t he mining company w ill have t o buy fresh st ocks from t he Government s and replenish it s sixt h folder. That means t he buying and selling of nat ural resources w ill be made bot h in physical form and demat erialised form. TOP Tax syst em makes
it impossible for any mining company t o illegally mine huge quant it ies of ore or minerals w it hout paying correct price. TOP Tax syst em makes it possible t o know t he exact quant it y of ores or minerals mined, export ed or used by domest ic companies.
TOP Tax system’s five main objectives are 1)The tax collections from people, 2) the distribution of revenues from governments to people in the form of subsidies, relief funds in the event of natural calamities like earth quakes, floods, famines, pensions, cash transfers tow ards monthly rations, hospital bills, education bills, et., 3) providing all basic services including registrations of movable and immovable properties, driving licences, air, bus, train tickets, permits, licences, payment of electricity, telephone bills, w ater cess, house taxes, issue of voter lists and voter slips, birth and death registrations, census figures at every day, every hour, every minute (unlike at every decade in the present system), 4) lending money to borrow ers at the low est PLR (average 3%per annum). All these objectives can be met and carried through banks/ service centres to all people at single w indow , situated nearest to their homes (5) implementation of w elfare schemes to BCs, SCs, STs, tow ards education, self employment and other areas, and monthly pensions to senior citizens (w ith no or paltry incomes) and physically challenged.
All t he earnings/ savings of an individual deposit ed in t heir respect ive account s (M SA/ SSA) in t he form of numerical/ digit al value can be ut ilised at any t ime for buying of movable or immovable propert y or for any ot her legally allow ed purpose. The unut ilised deposit s w ill be disbursed as loans t o t he borrow ers by t he banks at t he low est lending rat e (average 3% per annum as operat ing cost ). The t ot al profit s (an est imat ed 64,973crores) got by all t he banks/ service cent res w ill be more t han enough t o operat e t hem and t hey can meet all t he object ives of TOP Tax syst em i.e.
providing all basic services t o people at absolut ely free of cost at single w indow . .
3. M oney supply (real money and loan money).
TOP Tax system suggests that total money supply (real money and debt money/ loan money) to be necessary for circulation in banks should be at the minimum level of 100% and at maximum level 110% of the value of GDP of the country. Out of this total money supply in the economic system, 99.4% of the money w ill be in dematerialised (non physical) form in the accounts of citizens, Governments and com panies. Only small portion of money, equalling just 0.6% of the t otal money in the economic system, w ill be in physical form i.e. currency notes or coins. All high valued paper currency notes w ill be demonetised.
A brief description of M oney Supply in present economic system and the TOP Tax system
M oney Supply in present economic system: - M oney is classified as different categories like M , M 1, and M 2 and so on. The money in the banking system can be expanded over the initial reserve due to money multiplier factor. The velocity of cyclic rotation of money in the economic system is erratic and not stable because of the extra added w eight the loaned money carries in the form of interest burden. Here money is having both exchange value and storage value. The money’s volume is increasing by virtue of its stationary position in the form of demand deposits, savings deposits, bonds etc. The carcinogenic grow th of loaned money causes inflation. Here the high grow th rate and inflation are inseparable Siamese tw ins. There is sizable physical money w hich helps tax evasion in generating black money. For exam ple in India, t here is an estimated physical currency of 10,72,020 crores w ith the public out of total money supply of 77,25,560 excluding fake currency in
the economic system (As at 2012 - June 29 ). This physical currency is about 13.8% of the total money supply in the economic system. The unaccounted GDP, carried through unreported/ hidden/ shadow accounts w ith active support from physical currency, is assumed to be almost equal to the officially recorded GDP. The unaccounted cycles of 10 % physical currency are almost equal t o the cycles of the remaining 90 % of the total money supply in t he economic system.
The non physical money, w hich has to honour the taxes, tax law s, accounting, auditing and tax returns, is having less velocity. The physical money, w ith its natural free flow ing tendency, is choosing the smooth domain w here it can escape from taxes, tax law s, accounting, auditing and tax returns to get greater velocity in its cycles. That means the total money in the economic system has tw o extremely different velocities - one for the physical money and the other for the non physical money. The exact volume of real money and loaned money cannot be know n at any specific time instantly. The real money and loaned money are mingled together beyond recognition. So the exact values of the total money supply, the velocity and cycles of the money and GDP may not be available. The money supply and GDP values, that are being furnished, are believed to be off the mark. The exact results of measures, taken by the Governments and Central banks from time to time to check inflation or to infuse fiscal stimulus packages to control recession, can be observed only after long time. The medicines and therapy, that are used to nurse the health of an economy, are basically t rial and error methods. There are so many regulators like, CRR, PLR, SLR, repo, reverse repo that w ork on money supply in the economic system to check inflation, economic recession and deflation. The actions of these regulators on money supply usually give results that are quite opposite to each other. They alw ays endorse one proverb – Too many cooks spoil the broth.
M oney Supply in TOP Tax system
TOP Tax syst em’s M ain Savings Account M SA w ill have five sub account s for money, shares/ st ocks, bonds, derivat ives, movable propert y, immovable propert y and family. The Sub Savings Account is only money account as in t he present banking syst em. The Corporate Account Numberw ill have seven sub account s for money, movable propert y, immovable propert y, securit ies, raw mat erials and ot her input s, man pow er, manufact ured product s. The money account of all t hese t hree account s w ill be used for st orage and usage of money for personal or business or indust rial purpose.
In TOP Tax syst em t here w ill be zero int erest rat es on t ime deposit s, demand deposit s, Government bonds et c. The prime lending rat es w ill be just 3% per annum on loans up t o 10 lakhs and 4% per annum on loans above 10 lakhs.
Top Tax syst em suggest s t he Cash reserve Rat io CRR permanent ly at 10%.
An individual’s money account of M ain Savings Account cont ains his/ her ent ire money got from earnings, savings, donat ions, inherit ance and loans t aken if any. Loans can be t aken by an individual from banks upon mort gage of his/ her movable and immovable asset s w hich are recorded in t he sub account s [LCA, IPA, SA]of his/ her M ain Savings Account. Loans can be t aken by individuals t hrough M ains Savings Account only because all his/ her asset s w it h ow nership right s are maint ained in M ain Savings Account .
An individual can open Sub Savings Account s t o run, operat e one or mult iple indust ry/ business/ inst it ut ion. There is no limit t o open Sub Savings Account s. M oney can be st ored, used or operat ed from t his account t o run any indust ry/ business/ inst it ut ion. Loans cannot be t aken from t his account . Loans can be t aken by individuals only t hrough M ains Savings Account because all his/ her asset s w it h ow nership right s are maint ained in M ain Savings Account .
An individual can run any indust ry/ business/ inst it ut ion by using his/ her M ain Savings Account w it hout opening Sub Savings Account . That means Sub Savings Account is not compulsory for an individual t o run his business or indust ry.
Similarly t he borrow ings of money (loans) for indust ries run by corporat e companies or public companies w ill be recorded and maint ained in Corporate Account Numbers (CANs) of t hose companies. Loans can be t aken by company or indust ry from banks upon mort gage of t his company’s movable and immovable asset s w hich are recorded in t he sub account s [LCA, IPA, SA] of t his company’s Corporate Account Number [CAN]. Loans can be t aken by company t hrough only Corporate Account Number [CAN] because all t he company’s asset s w it h ow nership right s are maint ained in Corporate Account Number [CAN].
The functioning of banking system in TOP Tax system is totally different from present bank system.
M oney w ill be in tw o forms 1] physical money i.e., bank notes and coins 2] digital money.
Physical money and digital money is equal to total money supply in the banking syst em. Total money supply minus t otal loans is equal to real money. The value of the real money w ill be equal t o 52.63%
(minimum level) of total money supply in the economic system if Cash Reserve Ratio is 10%. The remaining 47.37% of the money supply can be generated through loans. The real money w ould be at minimum level of 52.63% and can increase beyond that. The total loaned money given by banks w ould be at the maximum level of 47.37% of total money supply (or 90% of total real money) and can decrease below that. An increase in the real money beyond 52.63% means a decrease in the loaned money from 47.37%. The physical currency constitutes just 0.6% of the total money in the economic system. The remaining 99.4 % of total money supply w ill be in non-physical form i.e., digital form in the M SAs, SSA’s, CAN and government account handled by banks. There w ill be no interest rates on demand deposits, time deposits, bonds etc. The prime lending rates on loans given by banks w ill be just 3 to 4 % only. The loans w ill be given upon mortgage of movable and immovable properties and shares or on personal incomes. There w ill be no loans on deposited checks and demand drafts or other instruments of money. Here the money w ill have only exchange value and it w ill not have storage value. M oney w ill be purely utilised as medium in exchange of goods, commodities, shares, physical and intellectual w orks. There w ill be absolutely no incomes on stocks of money. An individual w ill have to spend exactly w hat he earned, saved, inherited, donated or gifted. The cycles and velocity of the total money in the system w ill be even and constant.
Total M oney supply in the economic system Guidelines t o give banking license for banking business
1. Banking license should be liberalised
2. The minimum securit y deposit should be 1000 crore Rupees t o get license t o ent er banking business.
3. Government should give licences t o any individual or financial instit ut ion or public limit ed companies w hich have capit al invest ment of minimum Rs. 1000 crores.
4. This is securit y deposit t o run banking business.
5. This deposit in Bank’s Account is bank’s capit al money. It is called as fixed money or static money because t he bank should not use it s capit al m oney as long as t he bank runs banking business. It should remain unt ouched by t he banks. The bank’s profitsw ill be added it it s capit al money. This profit money can be used t o pay salaries and t ow ards ot her operat ing cost s of t hat bank.
There may be hundreds of banks in t he count ry. Each bank may have t housands of branches. Each bank may handle t housands of account s. There should be a bank for t he populat ion of every 2500 people. For example in India it requires 5, 00,000 bank branches. So on an average a bank w ill handle roughly 2000 account s. [Every cit izen above t he age of 15 years should have M ain Savings Account ] All t hese banks are under t he cont rol of Cent ral Bank t ot al.
