Rahul Mehta Gandhinagar LsCandidate

How large Indian companies can evade taxes on internal income using SEZs using fake exports losses and fake import profits. Solution : (ab) cancel tax exemptions to SEZ. And please note --- each and every leader at Congress, BJP, AAP including NaMo, Sonia, AK are supporting tax exemptions to SEZ. BST-workers are also supporting tax exemptions to SEZ. We at Right to recall group are ONLY ones working to cancel tax exemptions to SEZs. For other solutions --- see last para.
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SEZs make profits on exports tax free. Now here is how a large Indian company can evade taxes on internal profits as well. For simplicity,. I am taking $1 = Rs 50
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1. Say Indian company C1 has made profit of Rs 1000 crore in business. Then tax payable is approx Rs 350 crore.
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2 Now the owner can open a company M in say Mauritius . Now say some goods which are worth Rs 1000 crore = $20 million in international market are fetch Rs 1000 crore in Indian market i.e. custom duty is very low
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3. Then company M can buy goods for $ 20 million = Rs 1000 crore, and then company C1 can import those goods at twice the price i.e. Rs 2000 crore = $ 40 million.
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4. Then C1 can sell those goods in Indian market at Rs 1000 crore. So loss to company C1 = Rs 1000 crore.. But there is NO net loss to the owner, as his company M gained a profit of Rs 1000 crore = $ 20 million
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5. So net profit of C1 = Rs 1000 crore + ( - Rs 1000 crore) = 0. So tax payable by C1 = Rs 0
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SUMMARY of step-1 to step-5 : Using OVERPRICED IMPORTS , one can move all profits of Indian company outside SEZ to some foreign company M
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6. Now consider some goods which cost Rs 1000 crore in Indian market, and also cost Rs 1000 crore in international market i.e. margin is very low. Now owner of C1 can start a company C2 in SEZ. And C2 can export these goods to M at Rs 2000 crore = Rs 40 million . So company M has now zero profit
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7 And profit earned by C2 in SEZ = Rs 1000 crore.
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SUMMARY of step-5 to step-7 : Using OVERPRICED EXPORTS , one can move all profits of foreign company M to Indian company C2
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8. Now since C2 is in SEZ, tax payable will be zero. So total tax owner of C1 = owner of M = owner of C2 will now pay will be zero
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IOW , a company outside SEZ can siphon off all its profits to a foreign company using OVERPRICED IMPORTS.and then bring back into sez company. using OVERPRICED EXPORTS. Thus one can transfer profits from India non-SEZ company to SEZ-company. But this is possible only at large scale.
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Thats why, despite so called exports from SEZ, India is always forex deficient. Because many companies keep importing and importing and importing.
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SOLUTIONS :
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1. Cancel all tax exemptions given to SEZ
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2. Allow Indian companies to have dollar accounts in SBI and affiliated US bank and transfer dollars amongst each other. The transactions must be via SBI which will do transaction via affiliated US bank.
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3. Make all import expenses non-deductible expenses.
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4. Make all ALL export income tax exempt.iff dollars are given to Govt and taxable if dollars are kept in company account or if dollars are sold to a private company.
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So exports will increase and imports will decrease.
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Once dollar debt is paid-off, we can decrease\remove tax exemption to exports.
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Now please note that ALL leaders of Congress\BJP\AAP\RSS support tax exemptions given to SEZ, including NaMo\Sonia\AK\Bhagwat. BST has great leaders, but BST-workers now support SEZ exemption, though they all will show you Rajeev Dixitjee's pictures and shouy Swadeshi slogans. We at Right to Recall Group are the only activists in India working to remove tax exemptions given to SEZ. Please join our group . Please see link in my profile page. Please dont waste time with BJP, AAP, Congress, RSS, BST-workers etc. They all support tax exemptions to SEZ.
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