Rahul Mehta Gandhinagar LsCandidate

How transaction tax , if implemented , can be evaded and so net govt tax revenue will be almost zero. Now dont blame me for finding loophole in TT. Pls blame Anil Kane etc for leaving or creating loophole in TT.

As TT - Transaction tax is defined by Anil Kane, t% will be charged when A pays to B via BANK. But there will no charge if "some non-bank X makes promise to pay Rs 100 A and that promise to pay reduces/increases by any amount".

So following is the way by which if TT becomes law, then everyone can avoid transaction tax

Say A, B, C, D .... are all persons and businesses. And X is some non-bank. They all have account in SBI. They will all open account with non-bank X.

1. A gives Rs 10000 to X via SBI . In return, X gives A "promise to pay Rs 10000"

2. B gives Rs 10000 to X via SBI. In return, X gives B "promise to pay Rs 10000"

3. C gives Rs 10000 to X via SBI. In return, X gives C "promise to pay Rs 10000"

...

In all above cases, TT will apply.

But now each time A and B need to pay eachother, they wont use SBI. But they will all use X. Say A needs to pay Rs 100 to B. Then A and instruct X to reduce "promise to pay A" by Rs 100 and increases promise to pay B by Rs 100. So A's balance will be Rs 9990 and that of B will Rs 10100.

So now whole India can pay using "promise to pay X" , where X is non-bank, and and thus transaction tax collection to govt will be zero.

Again pls dont blame me for finding loophole in TT. Pls blame Anil Kane etc for leaving or creating loophole in TT.