U.S. expats can’t renounce their citizenship fast enough

The swearing in of new citizens often makes news in the U.S., especially if it happens in unusual circumstances such as one party’s national convention. Much less reported are the many citizenship renunciations by Americans, and the travails leading up to these life decisions. Almost all those giving up their U.S. nationality are expats. And for each renouncer going through the ordeal, there are countless others thinking about it. Why?

One recent press release in particular has caused quite a stir. It suggested that, after “a steep decline” in recent years, renunciations in the first half of this year soared to 5,816, more than twice as many as gave up their passport in all of 2019. The implication, as reported breathlessly in the American media, was that expats, already fed up with President Donald Trump, finally despaired over his mishandling of COVID-19 and quit. Other factors were cited as merely secondary.

But these renunciation numbers are notoriously flawed. They’re based on a list of names of renouncers published every quarter by the Internal Revenue Service — experts call this a form of “doxxing.” That list lags in time and jumbles data. In reality, most embassies and consulates stopped making renunciation appointments this spring, owing to the pandemic. 

And the dip in prior years, according to experts, was due to backlogs and underreporting.

A U.S. immigration officer swears in a newly naturalized citizen in an empty parking amid the outbreak of the coronavirus disease in Santa Ana, California, in July. | REUTERS

By the best estimates, renunciations have been rising since 2010, when the Obama administration passed the notorious Foreign Account Tax Compliance Act (FATCA), inflicting misery on U.S. expats everywhere. In 2014, the government raised the renunciation fee from $450 to $2,350. Undeterred, expats kept at it. The American bureaucracy then indirectly slowed the pace with red tape in the first three Trump years. But we’re back on trend in 2020.

Now, it may be true that most expats aren’t crazy about Trump. Americans abroad tend to be cosmopolitan professionals, often married to foreigners or following international career paths. Watching their home country in their host nation’s news, or talking about it at local dinner parties, has stopped being fun. The images occasionally evoke a banana republic succumbing to pestilence while arming for civil war.

But that’s clearly not the reason why so many expats have been trying to drop their nationality for the past decade. Instead, as I described last year, it’s the nightmare of American tax and financial reporting, in which any accounts or assets deemed in Washington, D.C. to be “foreign” are automatically suspect, requiring extra disclosures that can be ruinous in time, expense and peace of mind.

The U.S. is almost unique in the world in taxing based on citizenship rather than residency. It’s also uniquely parochial in being unable or unwilling to distinguish between, say, a rich American living stateside and stashing money offshore and, for example, a middle-class American married to a German and teaching elementary school in Berlin. The hell starts with that conflation.

Before 2010 America’s citizen-based taxation didn’t necessarily disrupt the lives of expats like this school teacher. That’s because few expats even knew about the horrendously complex reporting rules or bothered with them. But FATCA required them to make new and redundant disclosures or face the prospect of tens of thousands of dollars in fines or even prison. It also required their foreign banks, brokers and insurers to report on them to the IRS, or face draconian sanctions.

Unsurprisingly, many foreign banks and brokers therefore stopped taking “U.S. persons” or green-card holders as customers. So American expats have increasingly been locked out of retail finance in their host countries.

Worse, the European Union then started passing laws with bureaucratically sublime names such as MiFID II and PRIIPs that imposed new rules on everything from mutual funds to life insurance. This scared the U.S. banks and brokers of American expats living in Europe, so they also started kicking out their customers with foreign addresses. Many Americans overseas are financially marooned.

In their desperation, several have been taking their struggle to the courts. Fabien Lehagre, a French citizen who is also an “accidental American” because he was born in California, wants to invoke the EU’s data-privacy laws to have FATCA declared illegal in Europe. A U.S.-British dual citizen calling herself “Jenny” is trying to crowdfund a legal odyssey to do something similar in the U.K. Another challenge is underway in Canada. Occasionally, there are even small victories.

But on the whole, Americans abroad feel ostracized by their own country. Like their fellow citizens back home, they’re caught up in the tribal clash between Republicans and Democrats. But when it comes to acknowledging the hardship of expats, the Democrats have mostly refused to listen. The GOP has since 2016 called for the abolition of FATCA and citizenship-based taxation in its platform. But the few Republicans who’ve tried to effect change have so far failed.

If the estimated 9 million Americans living abroad were recognized as a political geography, they would rank ahead of 40 states by population. Their ill treatment by the U.S. tax and compliance regime would be headline news, and probably solved in a bipartisan tweak of common sense. But they’re not a bloc. Like much about American democracy, this discrimination seems unfair. And yet, these millions of voices must be heard.

(Source: JT)

British households face disposable income fall of £515 per month

UK consumers could take £43bn hit as coronavirus crisis ravages UK economy

British households will have £43bn less cash available for essential spending between April and June, as the UK slides into its deepest recession in decades.

Disposable income earned by UK households, once it has been adjusted for tax and benefits, will be 17% lower in the second quarter of this year, according to analysis from the Centre for Economics and Business Research consultancy.

The CEBR has calculated the monthly hit to disposable incomes will reach £14.2bn per month, meaning a monthly fall of £515 per household as workers lose their jobs, accept reduced pay or hours, or are placed on furlough.

Economic data due this week is expected to show early signs of the pandemic’s impact on the economy, even before workers’ income is fully hit. UK retail sales are expected to have fallen by up to 10% in March.

Businesses closed during Britain’s coronavirus lockdown, in Camden High Street, London. Photograph: Kirsty O’Connor/PA

“These numbers are likely to be awful, supermarket food sales notwithstanding,” said Michael Hewson of CMC Markets. While food sales surged in the runup to the lockdown, demand for other items declined sharply.

“Fuel sales are likely to have contributed a good proportion of losses as everyone is confined to their home,” Hewson added.

The drop in consumer spending has already forced several struggling retailers including Debenhams, Oasis, Warehouse and Laura Ashley to call in the administrators since the shutdown began.

The data firm Markit’s survey of UK purchasing managers, due on Thursday, is likely to show that output across the economy slumped in April, faster than in the depths of the financial crisis in 2008-09.

The CEBR predicts the pandemic will cause the deepest recession since the financial crisis, with unemployment more than doubling, after businesses had to temporarily close as a result of lockdown restrictions and cutting costs to preserve cash.

The Office for Budget Responsibility estimates up to 2.1m people could lose their jobs in the second quarter, and data from the Department for Work and Pensions showed 950,000 people applied for universal credit in the second half of March.

The CEBR calculates that the biggest increase in unemployment will be among the lowest-paid workers, and estimates benefits claims will only go some way towards replacing disposable income.

The consultancy estimates that the cost to households could have been twice as bad as they have calculated if the government had not implemented the furlough wage-subsidy programme. The Treasury has agreed to cover 80% of the wages of workers up to a maximum of £2,500 per month to prevent them being laid off by their employers. In the majority of cases workers have seen a 20% fall in their earnings.

The government has extended the scheme until the end of June, following the decision to extend the lockdown for a further three weeks.

The Resolution Foundation thinktank calculates that the coronavirus job retention scheme (CJRS) will cost the exchequer £40bn in its initial March-to-May phase, because of the large number of private firms taking advantage of it.

Once the government ends the lockdown and begins to ease restrictions on the economy, the CEBR is calling politicians to take further measures “to put cash into people’s pockets” to kickstart the economy. Among the measures it proposes are a temporary reduction in VAT, or stamp duty exemptions.

(Source: The Guardian)

As certain as death and taxes

I lost my job of fifteen years, and as I was filling out my tax return to explain this loss, I thought, Well, this was the one constant that had never changed. Taxes were always there. Every April, the forms explained what had happened to me that year, where I was living and what I was doing. There was a box for every loss and every gain, and there was a box for the things that would always remain the same. There was a record of everything.

I signed up for classes at a tax-prep company. In the first session, we went around the room to introduce ourselves. Many of the other students had been accountants in other countries, others had degrees in economics, some had MBAs or owned their own businesses. All said they didn’t know how to prepare a Canadian tax return and just wanted to learn.

The job I had before was for an investment advice publisher, where I learned that I liked numbers. I liked that the number four was always four and no one could argue with you about that. Every number had its own narrative power, even if you couldn’t see it right away. When a number changed, or when you expected it to and it didn’t change, that meant someone out there in the world had done something to make that happen. People made big decisions because of a little number. Everyone had a theory and a prediction about it. I had been an English major, but I didn’t feel out of place in the class. The theories we read and studied were really about people, and the tax return was a way of telling their stories.

After four months of training and an exam, I went to interview for a job at the company. The interview was set up like a theater audition. There was a makeshift office and an audience, and workers acted out client scenarios you would likely encounter on the job. Someone was cast as a client and based on the script they handed you, along with a completed tax return, you had to explain the refund or balance owing, but you didn’t know how the client in front of you would react or what kinds of questions they might have. The scene started with a handshake and a smile and a welcome. If you failed to make these gestures, you were asked to sit down and someone else would replace you immediately. The thing they wanted most was to get a client to book an appointment for next year. The hiring team watched in real time and after every scene we would discuss what we could have done better.

In my scene, the client became upset, raising his voice, saying that the return couldn’t be right—especially for the price we were charging him—and that he would go home and do it himself. I acknowledged his feelings and agreed he had a right to be upset, and I pretended to take notes so he felt I could do something about it. I told him I’d already finished the return and could send it instantly—why go home and figure this out, when it was already done. Then, I offered a free return for his troubles and booked an appointment for him for next year. This turned out to be the right thing to do. The district manager said, “That’s right. Be calm, take notes. Make them feel you can do something to help. There is no reason to lose a client. And YES … book an appointment!” He made me an office leader on the spot. This meant that on top of being a tax preparer, I would manage an office.

NORMAN ROCKWELL, THE ACCOUNTANT, 1924

The office was a kiosk. It was located near the cashiers of a big-box store. The location gave the office visibility. While people stood in the checkout line, they would notice us and come by to book an appointment. At this office, there could only ever be one person working. Four padded walls, with one chair, one printer, one file drawer, one computer. I wanted to make sure I introduced myself to the other two women who worked there. When I started, I stayed to meet them, to help them get settled in.

The first person who arrived for her shift was Mrs. B. She told me I had a nice face, that no one would yell at me. She said it was her second year working for the company. She had been an accountant in Ukraine. She was retired, but was feeling bored. She said her husband had died a few years earlier. He had brain cancer. One day he fell over and she held him in her arms while he died. Before he died, she said to him, “Do you see me?” And the last thing he said to her was, “Yes, yes. I see you.” Then, she took out a lipstick, put it on, and shut the case. I loved Mrs. B right away.

The next was Mrs. C. She sold insurance and could work only a few hours on the weekends. She was excellent with her tax theory, and when she didn’t know how to do something, she never said. Our computer had something that was like a Bat-Signal. You could click on it, and someone more experienced would be able to view the computer screen in order to fix whatever trouble you were having from their remote location. Those of us in the office were trained to do only basic tax returns, not to be creative with them. The software was locked into the level we were trained at. A warning light would come on and block us from filing if we prepared a tax return that was above our training level.

In fact, this software was designed to make the tax return easy and it isn’t available to the public. The average tax return took us only six minutes to prepare. We put numbers into boxes and the software deposited them into the right place and generated the correct forms and produced the right credits. We didn’t have to think about it. But we had to know the tax theory to detect if the calculation was right. We had to know how to explain the forms the software generated. We couldn’t just say, “You owe $2,000.” We spent most of that extra time on the client experience. Mrs. C always did this—she just clicked the button and talked to a client about the weather. The client never knew.

New clients, who hadn’t used the service before, always took more time. We had to build a new file, ask for several forms of identification, and make sure we didn’t miss anything. It was harder to know what we were missing with new clients. Sometimes they had children and didn’t mention them for the tax return and then missed out on credits. Or they would incorrectly interpret what they could claim. One client claimed to have a dependent, but then when I got to the part where I had to put in the tax number, it was revealed to me that the dependent was a turtle.

Even with returning clients who had been using the service for a long time and whose previous returns I could look up, there were things that changed. You had to ask clients their marital status and list the terms that were available, as each had its consequences. This part of the return was often comical and it opened people up to tell their stories. One man said to me sadly, “Unfortunately single.” It happened to be Valentine’s Day. I didn’t want him to feel bad and said, “Sir, there is no such thing here as ‘unfortunately’ so how about we just put ‘single’ for you.” And this helped him laugh at himself.

But it wasn’t always laughs. A lot of people don’t get past this section of the return in their first hour. After I asked their marital status, some clients listed all the things that had gone wrong with the relationship or all the things that had gone right, reliving every moment and crying about them. Sometimes they were still hopeful for a reconciliation and didn’t want to list their status as separated, even though, according to the theory, they were required to declare it. Other times, couples who came together would get into an argument when it was revealed, in our office, that they were not that serious about each other. Or it turned out, the divorce hadn’t been filed. Or a child their partner didn’t know about was named in the tax document. I often had to reschedule another appointment to finish the return. An hour just wouldn’t do for that.

The tax return is, in some ways, a record of truth. People give you what they have. Or, at least, you count on that. The numbers given to us were provided by a client. We can’t always know what they kept from us. It’s up to them. There is even a place in the tax return where you can declare money obtained illegally. It didn’t matter how you made your money, it mattered that you declared that you had it and you paid taxes. In the industry, the term we use to describe this kind of work is an “artist.”

For the most part, people are good and kind and they do pay their taxes. That is why they came in the first place—to get someone to help them do this. When the tax deadline arrived, at midnight, and I’d finished up the last return, a crew came in and unfolded the office like a piece of paper. Everything was boxed up, even the office chair and the stapler and paper clips. I looked at the space I had been in, and how it was now a polished floor. Looking at that floor, you wouldn’t know that anything poignant, strange, or funny had taken place there. But every tax return I had completed was someone’s story, and the record of those stories would last.

(Source: The Paris Review)

Google News may shut over EU plans to charge tax for links

Search engine is lobbying hard to stop proposed tax, aimed at compensating news publishers

Google’s top news executive has refused to rule out shutting down Google News in EU countries, as the search engine faces a battle with Brussels over plans to charge a “link tax” for using news stories.

Richard Gingras, the search engine’s vice-president of news, said while “it’s not desirable to shut down services” the company was deeply concerned about the current proposals, which are designed to compensate struggling news publishers if snippets of their articles appear in search results.

He told the Guardian that the future of Google News could depend on whether the EU was willing to alter the phrasing of the legislation. “We can’t make a decision until we see the final language,” he said.

Google’s UK office in King’s Cross, London. The UK is likely to be subject to the news link tax if it is introduced before the end of any post-Brexit transition period. Photograph: Ray Tang/REX/Shutterstock

He pointed out the last time a government attempted to charge Google for links, in 2014 in Spain, the company responded by shutting down Google News in the country. Spain passed a law requiring aggregation sites to pay for news links, in a bid to prop up struggling print news outlets. Google responded by closing the service for Spanish consumers, which he said prompted a fall in traffic to Spanish news websites.

“We would not like to see that happen in Europe,” said Gingras. “Right now what we want to do is work with stakeholders.”

Traditional news publishers have a difficult relationship with Google, which they blame for sucking up much of the advertising revenue which used to prop up print newspapers. However, many are also heavily dependent on Google News to send millions of readers to their websites, which can help boost digital revenues.

Google has been lobbying hard against the relevant piece of European legislation which would introduce the “link tax”, known as Article 11, and its sister legislation Article 13, which is designed to ensure content creators are paid for material uploaded to sites such as the Google-owned YouTube.

 Richard Gingras, Google’s vice-president of news, says the proposed tax could result in a reduced number of news stories in search results. Photograph: Alicia Canter/Guardian

The proposals were overwhelmingly backed by MEPs in September but Google is hoping to influence the European commission and EU member states before it is confirmed. The UK is likely to be subject to the legislation if it is introduced before the end of any post-Brexit transition period.

The EU is one of the few organisations large enough to force change at major tech companies such as Google and Facebook, which are reluctant to lose access to its 500 million citizens, putting Brussels at the heart of many lobbying battles over the future of the internet.

Gingras also claimed the proposed tax could impact on the ability of new news websites to find an audience through Google and said it could result in consumers seeing a reduced number of news stories in search results.

He also emphasised that Google News was not directly a profit-making business for the company, while conceding it did encourage users to spend more time on the company’s websites. “There’s no advertising in Google News. It is not a revenue-generating product to Google. We think it’s valuable as a service to society. We are proud to have it as part of the stable of properties that people have.”

(Source: The Guardian)

Trump puts 25% tariff on Chinese goods

US President Donald Trump is to impose 25% tariffs on $50bn worth of Chinese goods, accusing Beijing of intellectual copyright theft.

Tariffs that affect more than 800 products worth $34bn in annual trade are due to come into effect on 6 July.

The White House said it would consult on tariffs on the other $16bn of products, and would apply these later.

China retaliated, saying it will impose an additional 25% tariff on 659 US goods worth $50bn.

The US had earlier warned that it will impose even more tariffs should China retaliate.

Mr Trump said the tariffs were "essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs."

The Chinese product lines that have been hit range from aircraft tyres to turbines and commercial dishwashers.

In response, China announced tariffs on $34bn of US goods including agricultural products, cars and marine products which will also take effect from 6 July.

Tariffs on other US goods will be announced at a later date, the Xinhua news agency reported.

"If the US takes unilateral and protectionist measures that harm Chinese interests, we will respond immediately by taking the necessary decisions to safeguard our legitimate rights and interests," Chinese foreign ministry spokesman Geng Shuang said earlier on Friday.

All trade talks between China and the US would be void if Washington imposed trade sanctions, he added.

Stock markets dropped in Europe and the US after the announcements with investors concerned about a possible trade war.

'Counter-productive'
The US wants China to stop practices that allegedly encourage transfer of intellectual property - design and product ideas - to Chinese companies, such as requirements that foreign firms share ownership with local partners to access the Chinese market.

However many economists and businesses in the US say the tariffs are likely to hurt some of the sectors the administration is trying to protect, which depend on China for parts or assembly.

Farmers are also worried about harm caused by retaliation.

Economists estimate that the tariffs will hurt GDP by less than half of a percentage point. But the measures could also lead to higher prices and job losses in some industries.

The Motor and Equipment Manufacturers Association, which represents car parts makers, called the tariffs "taxes that hurt U.S. companies, put jobs at risk, and negatively impact consumers."

Boat-makers, which are also facing higher costs due to US tariffs on steel and aluminium, will now be hit with tariffs on almost 300 parts, said the National Marine Manufacturers Association.

The organisation described the tariffs as "bad trade policies that are piling up on top of each other".

The International Monetary Fund (IMF) warned that the dispute could hurt business and consumer confidence.

IMF Director Christine Lagarde said Thursday that a trade war would lead to "losers on both sides" and could have a "serious" impact.

US farmers are worried about Chinese retaliation

'Right on target'
The US announced plans for tariffs this spring, after an investigation into China's intellectual property practices.

It published a draft list of about 1,300 Chinese products slated for tariffs in April. The list released Friday incorporates feedback and criticism received in the ensuing weeks.

It contains about 1,100 items, including about 285 newly proposed items - such as items for the semiconductor industry - that are subject to further review.

The White House said the measures shouldn't hurt consumers, pointing out that items such as televisions that were included on the draft list had been taken off the list.

It will also allow companies to apply for exclusions from the duties.

The plans have elicited a mixed political reaction, drawing praise from Democrats and opposition from Republicans, who typically favour free trade policies.

Senator Chuck Schumer, a leading Democrat, said the president's actions were "on the money"

He said: "China is our real trade enemy, and their theft of intellectual property and their refusal to let our companies compete fairly threatens millions of future American jobs."

Republican Kevin Brady said it was "encouraging" that the administration had revised the initial list but urged the White House to further narrow the items subject to the tariffs.

He said: "My message has been consistent: we need to hit our target, which is China and its deceptive and harmful trading practices. But I am concerned that these new tariffs will instead hurt American manufacturers, farmers, workers, and consumers."

Analysis: Tariffs, the forgotten people and Trump
By Tara McKelvey, White House reporter

Trump talked about the forgotten people, white working-class folks, at his inauguration.

But the plans to impose tariffs will hurt individuals in the farm belt, an important part of his base. Recently, I visited Missouri, driving past soybean fields, and heard people talk about the way China would retaliate, imposing tariffs on soybeans.

White House aides have warned Trump about implications of his policies. One official told me they'd haul in maps to show him rural states and how they'd be affected.

He'd listen carefully, said the official.

Later, though, he'd move ahead with tariffs and other policies that were upsetting for Missourians and those in the farm belt.

(Source: BBC)

Reimbursement part of salary to come under GST? A rule change may make you pay more taxes

A large chunk of the reimbursement part of employees working in private sector may come under taxation net as the government is said to be mulling over bring "indirect earning" under the Goods and Services Tax (GST). The relevant amendment in the GST rules may be discussed and approved in the next meeting of the GST Council.

The idea of bringing reimbursements under the GST net flows from a recent ruling of the Authority of Advance Rulings (AAR) on canteen charges. The AAR ruled that the canteen charges recovered from an employee were to GST rates.

This ruling may prompt employers to stop charging for canteen services in a bid to save taxes, which, in turn, is likely to impact the salary packages. The employers would not prefer to increase the cost to company for their employees.

In a case involving a Kerala-based footwear company Caltech Polymers, the AAR ruled, "recovery of food expenses from the employees for the canteen services provided by company would come under the definition of 'outward supply' as defined in Section 2(83) of the Act, 2017, and therefore, taxable as a supply of services under GST."

Is the ruling going to impact other parts of reimbursement component of salary? "The decisions by the Authority of Advance Rulings are not binding on the GST Council. Both are independent of each other. The AAR works under finance ministry and has a lot to do with the Income Tax department while the GST is dealt with by a separate GST Council," chartered accountant Manindra Tiwari told Indiatoday.com.

"However, the GST Council may consider the rulings given by the AAR while considering revision in GST rules. The logic is simple: the reimbursements are not taxed because they are claimed after expenses have been made and relevant taxes already paid. But, the counter logic is that reimbursements involve earnings made indirectly and hence should be taxed," Tiwari further explained.

There has been an argument that the companies may be making recoveries avoiding taxes through salaries of their employees without issuing due invoices. "There is strong likelihood that some part of reimbursement may be brought under indirect taxation through GST," Tiwari said.

If the GST Council agrees to expand the ambit of the GST to bring reimbursements under the indirect tax net, it is certainly going to burn bigger holes in the pockets of employees working in private sectors.

So, reimbursements on home rentals, telephone bills, premiums for additional health insurance coverage, health check-ups, conveyance, gym, professional attires, entertainment or similar expenditure may attract GST. The corporates may soon be found restructuring salaries of their employees, to pass on the additional GST cost on to employees.

(Source: India Today)

Petrol prices may come down from Rs 70 to Rs 38 under GST. Will government do it?

While most of the taxable articles moved under the GST regime, petroleum products are still governed by VAT system.

Questions are being asked if Finance Minister Arun Jaitlely-headed GST Council will pay heed to Petroleum Minister Dharmendra Pradhan's suggestion on petroleum prices.

"The Petroleum products' inclusion in GST only way for rational fuel prices," tweeted Dharmendra Pradhan as the petroleum prices reached three-year high. Bringing petroleum products under the GST regime will make the fuels cheaper.

In Mumbai, petrol prices touched Rs 80 a litre while in Delhi, it is over Rs 70 per litre. If petrol is brought under GST, it may cost as little as Rs 38.10 in Delhi at 12 per cent GST rate.

It was August 2014, when petrol prices breached Rs 70 mark the last time. Back then the crude oil prices was around USD 98 per barrel. But, now the crude oil prices are hovering around USD 50 per barrel.

WHY ARE PETROL, DIESEL SO COSTLY
According to data released by the Indian Oil Corporation for the petrol price build up in Delhi, the fuel costs only Rs 26.65 at the refineries. Dealers get a litre of petrol at Rs 30.70. But, petrol is sold at Rs 70.39 a litre in Delhi. This means Rs 39.41 is charged as tax component and dealer's commission on every litre of petrol sold in the national capital.

While most of the taxable articles moved under the GST regime, petroleum products are still governed by VAT system. Different states have different rates of VAT applicable on petroleum products.

As per the data available with the Petroleum Planning and Analysis Cell (PPAC), Delhi charges a VAT of 27 per cent on petrol while it is 47.64 per cent in Mumbai, Thane and Navi Mumbai. This explains the difference of about Rs 9 in the petrol prices in the two cities.

CENTRE'S SHARE IN HIGH PETROL PRICES
Centre imposes excise duty on petrol and diesel. As per the PPAC data, excise duty on petrol has increased by 54 per cent since November 2014. An average increase of 46 per cent has been seen with regard to VAT on petrol while dealer's commission has been increased by as much as by 73 per cent.

Similarly, in the case of diesel, the excise duty has gone up by 154 per cent, VAT by 48 per cent and dealer's commission by 73 per cent. The excise duty on petrol and diesel has been increased on 12 occasions since 2014.

The combined effect of taxation on petroleum product by the Centre and the state governments is that the prices of petrol and diesel have gone back to 2014-level while the crude oil have become cheaper by little less than half.

It is not a surprise that during the same period revenue from petroleum products has increased from Rs 3.32 lakh crore in 2014-15 to Rs 5.24 lakh crore in 2016-17.

WHAT IF PETROLEUM COMES UNDER GST
Under GST, the petrol and diesel prices under the present circumstances will become substantially cheaper. The GST regime provides for taxation rates of 0, 5, 12, 18 and 28 per cent. Petrol and diesel can't be expected to be taxed below 12 per cent.

At 12 per cent GST, the petrol will be sold at Rs 38.1 in Delhi - almost Rs 32 cheaper than the current rate for one litre of the fuel. At 18 per cent, petrol will be 40.05 a litre in Delhi while at 28 per cent, it will cost Rs 43.44 per litre.

If the SUV compensation cess is imposed over and above 28 per cent GST on petrol, it will cost Rs 50.91 in Delhi - still about Rs 20 cheaper than the existing rate.

As for diesel, its current price in Delhi is Rs 58.72 per litre. At 12 per cent GST, diesel will sell at Rs 36.65 in the national capital. At 18 per cent GST, diesel will cost Rs 38.61.

At 28 per cent GST, diesel will cost Rs 48.88 in Delhi and if SUV cess is imposed, the customers will have to pay Rs 49.08 for a litre of the fuel - still Rs 9.64 cheaper than the existing rate.

But, bringing petroleum products under the GST involves politics. Under the GST Act, the decision to bring petroleum products under the new taxation regime can only be taken by the GST Council which has heavy representation from states, which are not ready to let go the hen laying golden eggs.

(Source: India Today)

Is P Chidambaram the biggest corrupt man India ever saw?

The Income Tax’s Chennai Investigation Unit’s report having more than 200 pages about former Finance Minister P Chidambaram’s family and especially son Karti and his companies’ huge assets in more than 14 countries are now out in the public domain. Recently some portion of this sensitive report was exposed in public by Bharatiya Janata Party (BJP) leader Subramanian Swamy in a press conference. Many media houses whose owners are friendly and in collusion with Chidambaram tried to black out the news.

In the interest of public, we are producing the entire data of assets and bank accounts found in the joint raid of Income Tax and Enforcement Directorate. 21 foreign bank accounts by Karti and his companies in Metro Bank in UK, 4 accounts in OCBC in Singapore in the name of Advantage Strategic Consulting Pte Ltd, the controversial company caught in kickbacks in Aircel-Maxis scam, 2 banks in Spain namely Sabadell Atlantico, La Caxia Bank, HSBC UK, Barclays Bank in Monaco, Marseille BNP Paribas in France, UBS in Switzerland etc.

The Income Tax which seized hard disks from Karti’s companies found that P Chidambaram, wife Nalini Chidambaram, son Karti and his wife Srinidhi jointly purchased a property and a big palatial house in Cambridge in UK.

As per the Income tax seized documents, the property bought by Chidambaram and family is: 5, Holben Close, Cambridge, CB237AQ. This huge property and home was purchased from Edmund Suley Holt and Heather Holt and the money was transacted from Karti’s personal account in London’s Metro Bank account number: 16714313.

Chidambaram never declared this property in any of his mandatory affidavits as Member of Parliament (MP) or Minister. Chidambaram in his affidavit to Rajya Sabha in May 2016 declared
only 1/3rd portion of the property as wife Nalini’s property. He also under-invoiced the value of this property of his wife’s share at just Rs.1.55 crores, while UK’s real estate websites estimate this property in Cambridge to be worth more than Rs.85 crores.

Karti’s Advantage Strategic Consulting Private Limited‘s Singapore company’s bank accounts to buy properties in UK like purchase of 88 acres farm house known as Surridge Farm in Somerset, UK. The land value shown in the registry is one million pounds.

Another property in Cambridge is at Ceres, 29, Meade House at Cambridge.

Chidambaram’s son Karti has built a massive empire in different parts of the world by making investments in real estate and engaging in other business activities in London, Dubai, South Africa, Philippines, Thailand, Singapore, Malaysia, Sri Lanka, British Virgin Island, France, USA, Switzerland, Greece and Spain. Most of the purchases happened during the period 2006 to 2014 when Chidambaram was Finance Minister and Home Minister. The probe agencies estimate these assets across the world are expected to be more than Three Billion Dollars.

Karti’s Singapore-based firm had acquired majority shares of a big resort in Sri Lanka, known as Lanka Fortune Residencies. This company owns the prestigious resorts ‘The Waterfront’, ‘Weligama.
Bay Resort’ and Emerald Bay Hotel. Karti’s Singapore firm routed money via Dubai to acquire three farms and vineyards in South Africa, identified as Rowey Farm in Grabouw, Cape Orchards and Vineyards Private Limited, and Zandvliet Enterprises, a wine and stud farm in Ashton. The Dubai-based Desert Dunes Properties Ltd has also investment in Karti’s Singapore-based company Advantage. The probes have unearthed a money trail of 1.7 million Singapore Dollars between these firms. Another Dubai-based company, Pearl Dubai FX LLC, also had financial transaction with Advantage. This shows that Karti linked firms have offices and assets in UAE also.

The Advantage’s Ceres, 29, Meade House had entered into joint ventures with the Philippines-based companies to obtain a franchise team of International Premier Tennis League (Asia). The Philippine firms, which were engaged in joint ventures with the Karti-controlled company, are SM Arena Complex Corporation, Sports Entertainment

Events Management Inc. The Advantage had also had financial transactions with another real estate company in Singapore known as Real Beyond Pvt. Ltd.  having three subsidiaries in Malaysia. The investigation has unearthed that these transactions led to 16 land purchases in Thailand.

The Advantage’s Singapore unit has set up a firm in British Virgin Island (BVI), namely Somerset Surridge Ltd. Advantage also invested 400,000 Singapore dollars in another BVI firm known as Full Innovations Ltd. It also has financial dealing with Geben Trading Limited in BVI and offices in Switzerland. This firm’s major transactions were through the famous Swiss Bank, namely UBS. The investigators got proofs of transactions in Dollars and Euro.

The Advantage also has transaction of five million Singapore dollars with another firm in Singapore, namely Unison Global Investment Ltd. The Karti-controlled company in Singapore entered into joint ventures with Gravitas Investments, Match Point International Tennis Events to buy a franchise Tennis team called ‘Manila Mavericks’. This deal was worth of 12 million US dollars and the money was paid in 10 instalments. Karti’s Singapore company also acquired a residential flat in Malaysia worth 1.9 million Malaysian Ringgits from a firm called Peninsular Smart. The probe team also found some agreement papers which shows that the Advantage holds franchisees of Café’ Coffee Day in some locations in Malaysia. The investigators have found several transactions to Karti’s Singapore firm with Malaysian companies. Malaysia is the head quarters of telecom giant Maxis which acquired Aircel in 2006.

The IT and ED officers seized payment details amounting to more than Rs.30 crore in foreign currencies. The Advantage in Singapore also opened a subsidiary firm in Barcelona in Spain known as Advantage Estrategia Esportiva SLU in August 2012. This is a sports academy having four acres with seven tennis courts in Spain. Karti-linked Singapore firm has also one million US dollar investment in a company in France known as Pampelonn Organisation. The Advantage also has transactions with a Greek firm known as Pisani John Sakellarios in Athens.

Karti’s firm Advantage Strategic Consulting Private Limited (ASCPL) had transactions with Aircel Televenutres, DCB Client, Diageo Scotland Limited, Katra Group, Sri Lanka Export Development Board, Unifi Wealth Management Ltd, VST Tillers Tractors, Carlton Trading Company, Claris Life Sciences’, ITC Centre, Best Land Realty Limited, Essar Steel Limited, Gokul Builders and Estates, S Kumar, INX Media, Reflections, Thiagarajar Mills Private Limited,
Saksoft, EL Forge Limited.

The Income Tax which seized hard disks from Karti’s companies also found that Karti used to get huge money as kickbacks in several Foreign Investment Promotion Board (FIPB) deals pending with father former Finance Minister P Chidambaram.

On Sept 22, 2008, ASCPL received Rs.35 Lakh from INX Media (now known as News X TV Channel), which applied for FIPB clearance of 220 million dollar during the period. Same day another Rs.60 Lakh was paid from INX Media to Northstar Software Solutions Pvt Ltd. Major shares of this Northstar Software Solutions Pvt Ltd controlled by C B N Reddy, who is a Benami and Director of ASCPL and its Singapore subsidiary also.

On Sept 24, 2008 another tranche of 20,000 Dollars were paid to ASCPL’s Singapore subsidiary by INX Media. On Sept 26, 2008, ASCPL had a money transaction of 50,000 dollars with Geben Trading Limited in Athens in Greece. This company’s address is 4 Zaf.Matsa Street, 14564 Athens, Greece and incorporated in British Virgin Islands (BVI). The money transactions of ASCPL also show to Geben Trading’s bank account in UBS, Geneva in Switzerland. The emails of banking transaction details were marked to Karti also and documents shows about a business takeover of healthcare and rehabilitation centers in Greece.

All these transactions happened during the INX Media’s Foreign Direct Investment (FDI) approvals for 220 million dollar were pending with Karti’s father Finance Minister P Chidambaram. In short, the murder accused Peter and Indrani Mukherjea who sold their INX Media paid around 9 crores rupees to Karti linked firms for FIPB clearance.

In August 2008, Karti’s Singapore company got 60 lakh shares in the media firm Network 18’s London based company Artevea Digital UK This deal happened when Network 18 applied for a series of FIPB clearances, when Chidambaram was the Finance Minister. This led to around 25 crores kickback for processing the FIPB clearance.

The documents unearthed by Income Tax shows that ASCPL received money from many companies when their FDI investment files were with FIPB and Cabinet Committee on Economic Affairs (CCEA) during Chidambaram’s tenure as Finance Minister. The companies which transferred money to Karti’s ASCPL are Claris Life Sciences, Diageo Scotland Limited which acquired fugitive Vijay Mallya’s UB Spirits, Katra Group, Arcelor Mittal linked Saksoft, Reflections belong to Spark Capital Advisory Private Limited. As per the Income Tax Analysis Report, all these deals involve around Rs. 500 crores kickback to Karti linked companies for necessary FIPB and CCEA clearances during Chidambaram’s period in Finance Ministry.

The documents seized from the raid also show that ASCPL received money from Best Land Realty, when the company got a Rs.304 crore loan from Public Sector Undertaking (PSU) Banks. In a bizarre incident, the British company Diageo Scotland Limited which acquired fugitive Vijay Mallya’s UB Spirits even paid 15,000 dollars as Service Charges to Karti’s ASCPL for fixing appointments with then Prime Minister Manmohan Singh, Finance Minister Chidambaram. Diageo’s emails thank Karti for fixing appointment of company owner Lord Blyth with Prime Minister Manmohan Singh, Finance Minister Chidambaram. The thanking email also attached the 15,000 dollar pay out receipt as Service Charges for fixing appointments with PM and FM. This is a clear case of abuse of power initiating case under Prevention of Corruption Act.

Another clear case of favoritism to son’s company by abusing power by Chidambaram is – In September 2006, Russia’s National Industrial Bank (Nazprom) appoints Karti’s ASCPL as Business Consultant for their Joint Venture with Indian Overseas Bank. The documents seized by Income Tax included ASCPL’s agreement with Russian Bank Nazprom and Nazprom’s series of communications with IOB including the meetings in Chennai. The emails show that
in each transactions with the Russian bank and PSU IOB, Karti’s ASCPL minted money in the form of consultancy. The Russian Bank’s agreement says Karti’s ASCPL’s Singapore subsidiary will  get 5% as commission with all transactions with Indian Overseas Bank, apart from the initial 25,000 dollar processing fee.

This is a clear case of abuse of power by Finance Minister Chidambaram to get a cut for son Karti’s company for each money transfer between PSU Bank IOB and Russian Bank Nazprom.
Karti’s ASCPL also received huge money from a South African company Nicholas Stynes Associates Limited. This South African company was engaged in providing security to IPL Cricket and the money transactions with Karti’s company happened when Chidambaram was Home Minister. The documents also show that ASCPL got huge money as commission from Allianze Securities for sale of NABARD Bonds when Chidambaram was Finance Minister.

The money was paid to Finance Minister Chidambaram from Karti’s Meltrack Ltd in relation to sale of shares and selling of huge tract of land in Mysore to VST Tillers & Tractors Limited. The land was mortgaged to Union Bank of India. P Chidambaram was shown as unsecured creditor to Meltrack Limited. A very interesting thing in all Karti companies including ASCPL – there are five common Directors like C B N Reddy, Bhaskar  Raman, Mohanan Rajesh, Ravi Viswanathan and V Padma. The Income Tax found that all these five persons have entered into a curious WILL that they owe all properties and assets to Karti or his daughter Aditi in consideration of respect and love to P Chidambaram! This shows that these five persons are nothing but Benamis of Karti and P Chidambaram. This is arguably one of the largest catch of black money in India from a politician’s family.

Source: All information provided according to the details given by the Income Tax department of India and Dr Subramanian Swamy.

(Source: Post Card)

Here is how traders are avoiding tax post GST in India

Businesses are already coming up with innovative ways to ensure that their products remain exempt or at lower rates under the goods and services tax (GST). How are they making it possible? Here's a look:

At the midnight of June 30, GST was rolled out in India at a grand event in the historic Central Hall of the Parliament. At the event, Prime Minister Narendra Modi had said that only will GST help us create One Nation, One Tax but will also help in bringing more transparency and end corruption. A week into the implementation of the Goods and Services Tax, traders in India have already found a way to avoid tax and save money. According to a report by ET, businesses are already coming up with innovative ways to ensure that their products remain exempt or at lower rates under the goods and services tax (GST). How are they making it possible? Here’s a look:

Under the GST regime, footwear below the price of Rs 500 are being taxed at 5% while above that at 18%. So to save the tax, shopkeepers have started to make a separate bill for each shoe of the pair, as per the report. Similarly, in clothing, apparel under the price of Rs 1000 is taxed at 5% while above it will be charged at 12%. So, the sellers have decided to sell different parts of a garment on different bills. So, if a shopkeeper gives you separate bills for your kurta and pyjama, don’t be surprised.

Another loophole is that branded rice is taxed at 5% while unbranded rice is exempted from it. India Gate, which is the largest selling rice brand in the country is already trying its best to exempt from paying goods and services tax (GST) as it didn’t get its brand name registered under the Trade Marks Act 1999. “This is to further clarify, declare and certify that ‘India Gate, Indian Farm, Lotus and Unity’ brands are owned by KRBL Ltd but since they are not registered in Class 30 under ‘Trade Marks Act, 1999’ hence ‘NIL’ GST rate is applicable on it,” KRBL Ltd, which sells India Gate packaged rice, said in an internal communication dated 3 July, as per a report by Livemint.

This scope of avoiding tax or paying fewer rates became possible because the government decided multiple rates under GST. While few products are exempt from tax, others are charged at 5%, 12%, 18%, 28% and 28% plus cess. Also, the tax will be divided between the state and the Central governments.

(Source: Financial Express)

Rs 100 ATM withdrawal to cost Rs 3 more due to 18 per cent GST

From July 1, the government has implemented the much publicised Goods and Services Tax that charges all the financial services in country under 18 per cent tax slab. Earlier, the service tax rate for these services was 15 per cent. It means there is a 3 per cent rise in tax incidence on country's financial services.

According to media reports, revised tax rates wuld increase cost of a banking transaction which means customers will have to pay Rs 3 more for every Rs 100 withdrawn from ATM.

It may be noted that banking customers are at present giving 15 per cent service tax for depositing cash, withdrawal from ATM, credit and debit cards, insurance premiums and EMIs.

Due to increased service tax under GST regime for financial services, banking services like withdrawals from ATMs, requests for cheque books, cash deposits and issuance of demand drafts would cost more than it did earlier.

Revised tax rate under GST would also apply on servicing charges and yearly maintenance contracts that cost of which would be borne by the banks, according to a report in The Financial Express.

The Bharatiya Janata Party-led government headed by Prime Minister Narendra Modi broke from customary way of launching a public policy scheme. On midnight of June 30, it held a grand ceremony in Central Hall of Parliament to kickstart India's largest tax reform effective July 1.

State Bank of India (SBI) chairperson Arundhati Bhattacharya had shed further light on the tax rate for India's banking sector. She had told DNA newspaper that for all services provided by banks, cost of the service will be added to the service tax.

"Under the GST regime, this will get converted into the cost of the service plus the GST, which will go up from the existing service tax rate of 15 per cent to 18 per cent," she added.

(Source: DC)

India's GST rates highest in the world

India's GST structure changed on July 1, 2017. GST will revolutionize the way Indians pay taxes and yet it a tax reform that most Indians have failed to completely understand.

What is GST and how will it change the tax structure?

GST or Goods and Services Tax is a detailed, multi-layered, destination-based tax that will be levied on every purchase.  It is an indirect tax applicable throughout India, replacing multiple cascading taxes charged by the central and the state government.
GST is governed by the GST Council and its chairman is the Finance Minister of India (presently Arun Jaitley).

Under GST, goods and services will be taxed under tax slabs of 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent. There is a special rate of 0.25 per cent on rough precious and semi-precious stones and 3 per cent on gold.

Almost 60 per cent of all goods under GST fall under the 18 per cent or the 28 per cent tax bracket, to ensure that the revenues earned by both centre and the state governments remain the same. While unpackaged grains and milk remain tax-free, items like hair oil, shampoos, deodorants and even chocolates are taxed at 28 per cent.

GST's role in transforming the economy:

GST will play a significant role in transforming the current tax structure, and therefore, the economy.Originally, the tax structure was divided into direct tax and indirect tax. The liability of the indirect tax could be transferred to the buyer when a seller sells his product. But GST addresses this problem.GST has a system of Input Tax credit which will allow sellers to claim the tax they already paid while purchasing from the retailer, so the final liability on the end consumer is decreased.
How does GST work?

There are three kinds of applicable Goods and Services Taxes. They are:
CGST: where the revenue will be collected by the central government

SGST: where the revenue will be collected by the state governments for intra-state sales

IGST: where the revenue will be collected by the central government for inter-state sales

The tax structure under GST would be:

Sale within the state: CGST + SGST

Sale to another state: IGST

GST around the world

Under the dual-GST structure both the central and the state governments have the power to collect taxes.
India has the highest tax rate out of all the countries that have implemented GST.

Let's take a look at the GST structures around the world:

1. France
There are 4 rates of VAT in France: 2.1 per cent, 5.5 per cent, 10 per cent and 20 per cent since its first implementation in 1954

2. United Kingdom
Since 2011, UK's VAT is set at 20 per cent

3. Ukraine
There are two VAT slabs in Ukraine, which are 20 per cent for most goods and services and 7 per cent mostly for medicines

4. New Zealand
GST was introduced in New Zealand in 1986 at a rate of 10 per cent which was later increased to 15 per cent in 2010

5. Australia
Introduced in 2000, the rate has been set at 10 per cent

6. Vietnam
Three VAT rates of 0 per cent, 5 per cent and 10 per cent are applied to most goods and services in Vietnam unless stated otherwise

7. Singapore
Implemented at 3 per cent in 1994, GST was increased to 7 per cent in 2007

8. Malaysia
Introduced in 2015, Malaysia's GST is set at 6 per cent

9. Canada
GST is set at 5 per cent on supplies of goods or services and includes most products. In some provinces of Canada, a Harmonised Sales Tax of 15 per cent is also charged

(Source: India Today)