Income Tax In India In Numbers

Income Tax In India In Numbers

With the deadline for filing income taxes for the financial year 2019-20 coming close on 31st December, let us have a look at some interesting numbers around the same from the previous year published by the Income Tax department.

Crux of the Matter

India despite being the world’s second most populated country, only a minor portion of its population files an income tax return. The following infographic shows the number of returns filed for the year 2018-19.

Now let u take a look at how many tax payers filed returns in each income group.

Personal tax and corporate tax paid in India have been increasing at a drastic rate. Have a look below.

The following infographic shows the state-wise distribution of tax collection for the year 2018-19.

Let us look at two of the important metrics for economists: Direct Tax to GDP Ratio and Cost of Collection of Direct Taxes. Let us take a look at the trend of the same in the 21st century.

  • Article 265 of the Constitution states that “No tax shall be levied or collected except by the authority of law”. Therefore, each tax levied or collected has to be backed by an accompanying law, passed either by the Parliament or the State Legislature.
  • Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts. Tax evasion often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability.
  • An informal economy is the part of any economy that is neither taxed nor monitored by any form of government. In most cases, unlike the formal economy, activities of the informal economy are not included in a country’s gross domestic product (GDP).

Rise And Fall Of B R Shetty

Rise And Fall Of B R Shetty

B R Shetty, the owner of Finablr Plc sold his business to an Israeli-UAE consortium for $1. He was once one of the top Indian origin billionaires in UAE, who reportedly had support from royal families of the UAE. Let’s see what led to the fall of B R Shetty.

Crux of the Matter

B.R. Shetty In India
B.R. Shetty was born on 1st August 1942 in Udupi, Karnataka. He completed his education in the field of pharmaceuticals from Manipal in India. Later he became Vice-Chairman of the Municipal Council in Udupi and married Chandrakumari Shetty.

Rise of BR Shetty

  • In 1973 B.R. Shetty landed in UAE as the country’s first medical representative.
  • In 1975 he founded a private health clinic New Medical Centre (NMC) with his wife. Today, it is the largest private healthcare provider in the UAE with over 4 million patients annually. It is also the first healthcare company from the Gulf Cooperation Countries (GCC) and the first company from Abu Dhabi to be listed (in 2012) on the premium segment of the London Stock Exchange and be a part of the FTSE 100 Index.
  • In 1980, BR Shetty bought ownership of UAE Exchange. UAE Exchange works as an intermediate to send money of expats easily to their families in their respective home countries. By 2016, it had expanded its operations in +31 countries with ~800 direct offices.
  • In 1981, he established NMC trading to market and distribute goods across UAE.
  • In 2003, he launched Neopharma a pharmaceutical manufacturing company in UAE. It is a contract based manufacturer for companies like Pfizer, Merck, Boots UK, etc.

Shetty At His Peak

  • In 2005, he received the highest civilian award from the UAE government.
  • In 2009, he received the Padma Shri award from the Indian Government.
  • In 2010, he bought 2 floors in the world’s tallest building Burj Khalifa.
  • In 2014, he acquired Travelex, a major foreign exchange company.
  • In 2017, he announced to invest ₹1000 crores in a Mahabharat film but the project was shelved later.

It is believed that he had support from royal families and powerful individuals of UAE to open a private hospital chain NMC because in UAE healthcare sector is taken care of by only the public sector.

Beginning Of The End

  • In 2018, he established Finablr as a holding company for UAE Exchange and UK-based Travelex. Finablr was listed on the UK stock exchange in May 2019.
  • In 2019, Muddy Waters Research, a firm known for short-selling, published a report about financial insecurities and a potential threat to NMC health.

“NMC’s reported cash balance shows two red flags that indicate they could be materially overstated… we believe…NMC materially underreports its rejection rate for reimbursement, thereby inflating its reported margin…We are unsure how deep the rot at NMC goes, but we do not believe that its insiders or financial can be trusted.”

Muddy Water Research‘s Report On NMC Health

Fall Of B R Shetty

  • In February 2020, over allegations of a corporate governance scandal, Shetty was removed from the board and post of chairman at NMC Health and from the board of Travelex. Moreover, authorities halted the trading in NMC and Finabir on the UK exchange.
  • The authorities found that the company had an undisclosed debt of $2.7 billion in addition to the disclosed debt of $2.1 billion.
  • In May 2020, the company’s revised debt came out to be $6.6 billion owed to over 80 financial institutions.
  • In December 2020 – BR Shetty’s Finablr Plc sold its business to an Israeli-UAE consortium for $1.

Read About UAE’s Ties with Israel: UAE-Israel Official Relations Established

  • NMC Health has been recognized as one of the UAE’s strongest brands by the Superbrands Council since 2015. It has been selected by the Abu Dhabi National Oil Company (ADNOC) to manage operations of Ruwais Hospital in the Al Dhafra region.
  • Dubai has one of the best public health systems in the world, run by the Dubai Health Authority (DHA), which oversees both public and private healthcare. The Emirate has four major government hospitals: Dubai, Rashid, Latifa, and Hatta.
  • Shetty’s first clinic was a remarkably small one that opened in Abu Dhabi in 1975. He himself had run the clinic, cleaned the small property, and driven the ambulance personally, while his wife took care of patients.

Is There A Catch Behind ITC Being Carbon Positive For 15 Years?

Is There A Catch Behind ITC Being Carbon Positive For 15 Years?

Recently, ITC was awarded for being the best company with ESG performance – it has been carbon positive for 15 years, water positive for 18 years, and solid waste recycling positive for 13 years. But do you know that its major revenue comes from sin product cigarettes?

Crux of the Matter

Founded on 24 August 1910, ITC’s headquarters is at Virginia House, Kolkata. It is an Indian conglomerate manufacturing a variety of products. However, a major portion of its revenues comes from the sales of sin products i.e. cigarettes.

Best ESG Performance
ITC has been carbon positive for 15 years, water positive for 18 years, and solid waste recycling positive for 13 years. About 820,000 acres of forest have been created to date leading to 150 million days of employment. Moreover, 41% of ITC’s energy consumption is met from renewable sources and the company has created 19,000 rainwater harvesting structures across 1.2 million acres.

In social reforms, it has provided supplementary education to 781,000 children, created sustainable livelihood opportunities for 76,000 women, started vocational training program and so far have trained 86,000 youth and has created 37,700 sanitation units.

But What Is Carbon & Water Positive?
Carbon positive is a term used when a company benefits the environment by removing additional carbon dioxide from the atmosphere. When a company replenishes dwindling levels of available water in a particular region, it is said to be water positive.

ITC, A Family Company?
ITC is perceived as a family company as most of its advertisement is related to household goods. However, in 2016 ITC challenged the government’s decision to add Pictorial Health Warnings (PHWs) to 85% large size on sin products. And earlier in 2003 it also challenged the implementation of the Cigarettes and Other Tobacco Products Act and appealed against the prohibition of smoking in public places.

Do you think ITC is achieving ESG goals & creating brand image of a family company to compensate for the sales of its sin product, cigarettes?

Let us know your views here.

  • Surrogate advertising is a form of advertising which is used to promote banned products, like cigarettes and alcohol, in the disguise of another product. This type of advertising uses a product of a fairly close category such as club soda, or products of a completely different category, for example, music CDs.
  • Established in 1910 as the Imperial Tobacco Company of India Limited, the company was renamed as the India Tobacco Company Limited in 1970 and later to I.T.C. Limited in 1974. The company now stands renamed to ITC Limited, where “ITC” today is no longer an acronym or an initialised form. 
  • Yogesh Chander Deveshwar was an Indian businessman. He was the chairman of ITC Limited and the longest-serving CEO of any Indian company.

Why Did US Add India To Currency Manipulator Monitoring List?

Why Did The US Add India To Currency Manipulator Monitoring List

While the US has branded Switzerland and Vietnam as currency manipulators, it kept India under the currency manipulator ‘monitoring list’ for intentionally devaluing Indian Rupee. But why would RBI devalue the Indian Rupee? How are the currencies valued? Let’s throw some light on this matter.

Crux of the Matter

RBI Under Watchlist
US has put RBI under the watchlist of currency manipulators for intentionally devaluing the Indian rupee to gain benefits. You might wonder how devaluing the Rupee helps India? In simple terms, devaluing the Rupee helps in boosting exports to foreign countries, which results in boosting the economy. However, RBI can devalue the Rupee up to a certain extent only, otherwise, it may have ill effects on the Indian and the global economy.

In recent, RBI has been buying dollars and selling rupees in the global market. This can also be seen from the growing foreign exchange reserves of India, which stood at $578 billion in December.

For instance, if $1 = ₹75 today, then,
1. if the the value of the rupee becomes $1 = ₹80, then rupee is said to have depreciated,
2. if the value of the rupee becomes $1 = ₹70. then rupee is said to have appreciated.

How Did US Come To Know About It?
To identify currency manipulation, the US has set three benchmarks.

First Benchmark
The first one is that the Bilateral trade surplus limit with the US should not cross $20 billion. In simple terms, the export value from India should not exceed the import value by more than $20 billion at any particular time. If India doesn’t import from the US and keeps exporting it will negatively impact the local market of the US. India has crossed this limit.

Second Benchmark
The second benchmark is that the current account surplus should be of at least 3% of GDP. Current Account has three components i.e. good and services, income, and current transfers. The goods and services measure the exports and imports of goods and services, income accounts for the government’s income and spending on financial investments, and current transfers include one-way gifts and remittances made in the country.

If the sum of these three components is less than zero, then the current account is in deficit, and if it is greater than zero, the current account is in surplus. Currently, India does not have a current account surplus of more than 3% of GDP.

Read More: India Achieves Current Account Surplus: What Does It Mean?

Third Benchmark
The last benchmark is that the net purchase of foreign currency should not be more than 2% of the GDP of the last 1 year. According to the US, RBI has been excessively buying foreign currency, thereby intentionally devaluing the value of the Rupee.

  • According to the Bretton Woods system, each country had to adopt a monetary policy that maintained its external exchange rates within 1% by tying its currency to gold. It was established in the cold war era and dissolved in 1968-1973.
  • Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. Most modern paper currencies are fiat currencies, including the U.S. dollar, the euro, and other major global currencies.
  • The most valuable foreign currency is the Kuwaiti Dinar. One dinar is worth approximately $3.28 or ₹241.13.

Attack At Apple’s Wistron Plant In India

Apple's Wistron Corporation Attacked By Protestors

Wistron Corporation is one of Apple’s global manufacturing contractors. Recently, the manufacturing plant of Wistron in Bangalore, India was under attack reportedly over the matter of wages. This attack comes at a time when India is inviting global players to produce in India and many companies are looking to shift their base out of China. Let’s take a look at the matter in detail.

Crux of the Matter

Wistron Corporation
Wistron Corporation is one of Apple’s global manufacturing contractors. In India, it manufactures iPhone 7 handsets and second-generation iPhone SE devices. Wistron Corporation headquarter is situated in Taiwan.

Violence At Plant
On 12 December, workers at Wistron Corp.’s manufacturing unit near Bengaluru turned violent over the issue of the wage dispute. “The company was defrauding workers on overtime payments, salary and had even resorted to assault,” said a company worker. The company has registered an FIR against 7,000 unknown people on charges of violence and vandalism.

Police FIR report says that the company suffered damage worth over ₹400-500 crores. However, as per the report submitted to Taiwan Stock Exchanges by the company revised its estimated damage to ₹25-50 crores. Attackers damaged the company’s buildings & vehicles by setting them on fire, damaged costly equipment including machines and computers. Wistron also said that it was likely that the vandalism was carried out by outsiders hired by employment agencies

Apple is dedicated to ensuring everyone in our supply chain is treated with dignity and respect. We have teams on the ground and immediately launched a detailed investigation at Wistron’s Narasapura facility in India.

Apple on Wistron Plant Attack in India

What Global Times Said About the Incident?

Business and academic circles hold high hopes for growth on the back of India’s cheap labor, but now it seems far from certain that low labor cost will eventually translate into manufacturing advantage in India. Instead, the rising wealth inequality in India is pushing a huge pool of cheap labor to the verge of social conflict and violence, damaging the country’s manufacturing sector and ruining its reputation.

Global Times, China on Wistron Plant Attack in India

Who Said What In India?

It is unfortunate that Wistron manufacturing plant was violently attacked by agitating workers near Kolar. At a time when many companies are shifting base from China to India, such attacks give a bad name for the State. I request CM B S Yediyurappa to order a probe into this incident.

C T RAVI, BJP National General Secretary

Help To Restart Operations

This is an unfortunate incident, and we are in touch with the company and the Union government and are doing all we can to help restart the factory within the next 10-15 days.

Shivaram Hebbar

Read about iPhone’s latest model here: Apple IPhone 12: Most Powerful Phone Yet?

  • Offshoring is the relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Lower cost and increased corporate profitability are often the motivation.
  • Global labour arbitrage is an economic phenomenon where, as a result of the removal of or disintegration of barriers to international trade, jobs move to nations where labour and the cost of doing business is inexpensive. Often, a prosperous nation will remove its barriers to international trade, integrating its labour market with those of nations with a lower cost of labour.
  • Wistron Corporation was the manufacturing arm of Acer Inc. before being spun off in 2000. Wistron employs over 80,000 people worldwide. As an ODM (original design manufacturer) Wistron designs and manufactures products for other companies to sell under their own brand name.