TO MAKE EASY CONTRIBUTIONS AND SUPPORT TO RELIEF FUNDS OF PM / CM – SOME SUGGESTIONS.

[CA DEV KUMAR KOTHARI]

08.04.2020 (DDMMYYYY)

Honorable Prime Minister and Finance Minister.

Sir and Madam,

First of all I congratulate the GOI and State Machinery for combating effect of COVID 19 in India in a very good manner. It is only because some segment of people did not follow advisories issued that we are in increasing trouble.

On 27.03.2020 I had discussions with some of my friends and I expressed that in  our country , under guidance of PM  if mostly followed  we will be able to restrict COVID cases and death to upper limit of 30000 cases and 3000 death. I am still optimistic that we will remain within those upper limits, in spite of damages caused by some sections of people behaving foolishly and irresponsibly.

In the following write-up I have made  some suggestions about helping public to extend fiscal support to governments in a manner that reduces fiscal burden of governments and public both.

Please forward and share this message with PM / FM and other concerned officers.

Yours sincerely

CA Dev Kumar Kothari

TO MAKE EASY CONTRIBUTIONS AND SUPPORT TO RELIEF FUNDS OF PM / CM  – SOME SUGGESTIONS IN DIFFICUTL TIMES DUE TO CONSTRAINED CASH INFLOWS OF GOVERNMENTS AND PUBLIC.

 Preamble.

COVID19 – World over, CORONA Virus has disturbed personal lives and financials and is likely to have greater impact if problem prolongs with more intensity. This is going to affect all- governments, organizations, families and individuals world over.

 Cash inflows are immediately strained for most of them and are likely to be more constrained in near future. In spite of the same everyone is ready to support governments and others as far as possible. Governments are trying to help public in general and poor people in particular. Rich people are trying to support  government and public. However, due to cash inflow problems everyone has fiscal constraints.   In such circumstances some suggestions are placed for  your kind consideration

Options for donations out of Refunds , credits available and Payments:

Many had expected tax refunds, and utilization of  tax credits available, however, due to lockdown, lesser commercial activity, it is not possible to utilize credits like  ITC under GST. For support by way of contributions to Relief Funds, some deductions from sums payable by governments and some surrender of ITC can be mutually useful for  fund flow management for government and tax payers.

Option can be provided to taxpayers, receiver of money   to contribute  out of refunds and payments receivable from GOI and State Governments. For example:

1. Out of  IT  and GST Refunds assesse can  request  to deduct certain amount for contribution to Relief Funds of GOI/ specified State Governments.
2. Out of GST Tax credits available (ITC) certain amount can be contributed for Relief Funds and the amount of ITC available can be reduced. This will not cause immediate cash out flow of tax payer and governments can easily
3. Out of payments to be made by governments and Government Agencies, PSU,  to suppliers and service providers  the recipient can  request  to deduct certain amount as contributions to Relief Funds.

Donations in kind:

Certain donations can be given in kind. For example, rich people can contribute  gold and silver to RBI/ GOI .

Temples can contribute gold and silver to RBI / GOI.

Contribution of Gold and silver can be used as backing to strengthen our currency.

Producers of goods for general public, public utilities can donate their products to Relief Funds for utilization for relief to poor and public welfare. In such cases market value of such products can be eligible for deduction from income.

Rich farmers can contribute some part of crop for welfare through government.

Donations from undisclosed income/ wealth:

Donations out of undisclosed income and wealth can be allowed with benefit of no tax now on such contribution , and tax rebate after 5 years in five instalments.

For example suppose a person want to contribute ₹ 100 lakh, he can be allowed to  make donation  by depositing cash ₹ 100 lakh  in bank and then making donation of ₹ 100 lakh to Relief Funds .

 No tax should be payable on such deposit and donation amount and there should be no enquiry for the source. There should not be case under other enactments. There should not be stigma of corruption or income more than known means, PMLA  etc.

 To make it more workable, tax credit can be allowed  from sixth year onwards in five  years by treating 1/5^th That is ₹ 20 lakh as payment against first instalment of advance tax from sixth to tenth year or with some other options as may suit to the GOI and tax payer.    

Deep Discount bonds can be issued:

Deep discount bonds can be issued for investment  of white or black money. If it is out of white money double amount can be rapid after 11 years and if it is out of black/ undisclosed money, double amount can be repaid after 17  or 19 years. ( more  logical calculations can be made to justify period of holding)

Wealth of temples can be used:

Wealth of temples (Bank balances, gold, silver) can be used for welfare purposes either as mandatory or voluntary contribution or by issue of deep discount bonds against contributions made by temples.