Non-Cascading Transaction Tax – An Inclusive Taxation Scheme Proposal

Overview:

This proposal of Non-Cascading Transaction Tax (NCT), is to Create an Overall Friendly View of the Taxation System, that drives Citizens / Residents, to do Save / Insure / Invest for their Future, and not just do, as a petty Tax Saving Obligation / relief anymore.

The idea of Transaction Tax, is decades older, and while there exists many Proposals by several economists and intellects in this respect such as Automated Payment Transaction Tax (APT) by Mr.Edgar L. Feige, Banking Transaction Tax (BTT) by Mr.Anil Bokil of Arthakranti, this proposal of Non-Cascading Transaction Tax (NCT) is specifically being made, to address the non-cascading taxation possibilities w.r.t. Transaction Tax (that naturally reinforces accountability in procedures), while encouraging everyone to Contribute to the System, that in turn enables them to create a better future for themselves and their future generations.

In Current taxation system, while In-direct Taxes (like GST etc…) are collected from everyone, there exists certain levels of exemptions in the scope of Direct Taxes (like Income Tax etc…), to specific kinds of Organizations, and also to Individuals, in specific use case scenarios.

While these exemptions are made at different times, to address several concerns of those times, it finally leads to a taxation system that is extremely Complex, and that leaves the proceedings to interpretations and possibilities of tax evasion & exploitation at mass scale.

Are we ready to have Real-time taxation, that goes in sync with One Nation One Tax notion, with no Cascading effect & higher Prosperity?

Some Keywords:

GST Alternative, Income tax Alternative,
Property Tax Alternative, NCT Tax, Transaction Tax,
Non-Cascading Transaction Tax, Real-Time Taxation

Target Audience:

Everyone who have an eye for knowing about Union Budget (of respective Country), specifically in the scope of understanding “What’s in it for them”, along with info about inclusive policies and future programmes, are welcomed to share their View / Opinion / Feedback / Suggestion / Comment on the draft version of this Taxation specific Policy Reform Proposal.

This applies to Employees, Entrepreneurs, Professionals (like Chartered Accounts / Tax Professionals / Doctors / Scientists etc…), Self-Employed, Teachers, Farmers, Students and anyone else, who aspires to see a taxation policy, that is pragmatic and that can potentially enable every Citizen / Resident to self-empower and to join everyone else, in taking the nation to the next level in a finite time period.

I. What is NCT Tax?

NCT Tax is an acronym for Non-Cascading Transaction Tax, that is an all inclusive simplification update to the taxation system, whose purpose is to facilitate real time tax collection on Gross Income (w.r.t. Credit Transactions, those that are received into recipient’s Bank Accounts), and in the transaction level, in a non-cascading approach, that is applicable at National Level (while respecting existing Double Taxation Treaties with Other Countries), to Individuals / Organizations.

Eligible Input Tax Credit / Refunds on previously paid NCT Tax is allowed to be Claimed by Organizations, on expenses, those that are made for industry specific business purposes only.

Since NCT Tax is Pro Digital Economy, and as this will be collected at Transaction Level, the adoption will be more seamless, when MDR / Transaction handling fee is inclusively calculated, as final Tax Value (Percentage / Fixed value) is ascertained and absorbed by the Government.

When seen in the micro level, this is a Hybrid Taxation System, that is an amalgamation of Income Tax, Goods & Services Tax (GST), and Property Tax, with an attempt to make the taxation system, more simple, friction-free and integrated, for maximizing Subjects participation.

Some Definitions:

An “Individual” is someone like a Person, who receives income on one’s Own Name and pays taxes accordingly.

An “Organization” is an entity that receives income on the Entity Name. The scope covers Sole Proprietor Firms, Partnership Firms, Private Limited Companies, Public Limited Companies, Societies, Trusts, Government Departments. This implies Businesses, Government Departments, Government Companies, Non-Profit Organizations, Political Parties, Spiritual Organizations etc…, all pay taxes accordingly.

A P2P transaction is a financial transaction that happens between Individuals.

A P2M transaction is a financial transaction that happens between an Individual and an Organization (in the scope of Merchant).

A B2B Transaction is a financial transaction that happens between Organizations (in the scope of, for profit Businesses).

An Organization 2 Organization Transaction is a financial transaction, that can be considered as one, between two Organizations (primarily in non-profit scope, even though a B2B Transaction can also be considered, in this scope).

II. Tax Percentage Definition (on a per Transaction basis):

1. For Individuals: 3% of Gross Income (with No Exemptions, in Direct Taxation scope).
   
2. For Organizations: 6% of Gross Income (that comes with Input Tax Credit/Refunds for Businesses & 100% Refund to Political Parties/NGOs/Spiritual Organizations/Relief Funds, after Tax Returns, in In-Direct Taxation scope).
   

III. Stakeholders and Tax Share Allocations:

1. Stakeholders: Central Government, State Government, Local Government, Banks
   
2. Tax Share Allocations among Different Stakeholders:
   

	Central Government	State Government / Union Territory	Local Government	Banks / Payment Aggregators / Payment Gateways / Financial Regulator
The Collected 3% Tax from Individuals will be shared as follows	1.5%.	0.75% to State(s)/Union Territory(ies), from where the Tax is Collected.	0.5% to Panchayat area, from where the Tax is Collected.	0.25% as Transaction handling fee.
The Collected 6% Tax from Businesses will be shared as follows	3%.	1.5% to State(s)/Union Territory(ies), from where the Tax is Collected.	1% to Panchayat area, from where the Tax is Collected.	0.5% as Transaction handling fee.

• When Recipient is an Individual: The above presented Tax Share Allocations can be considered to be applied as-is, for Individuals.
  
  
• When Recipient is an Organization, with Transaction Participants from the Same State / Union Territory: The above presented Tax Share Allocations can be considered to be applied as-is, for the Same State / Union Territory Transaction Scenario, only after honoring the Input Tax Credit / Refunds w.r.t., Industry specific Business Purposed Expenditure Only, as data is furnished by respective Subjects in the NCT Tax Return Documents.
  
  Note: Similar is the case with  tax sharing in between Local Governments of respective State / Union Territory combinations, as specified above.
  
  
• When Recipient is an Organization, with Transaction Participants from the Different States / Different Union Territories / a State & an Union Territory: The above presented Tax Share Allocations have be considered to be equally shared in between the participants, for the Different State / Union Territory Transaction Scenario, only after honoring the Input Tax Credit / Refunds w.r.t., Industry specific Business Purpose Expenditure Only, as data is furnished by respective Subjects in the NCT Tax Return Documents. 
  
  Note 1: Similar is the case with  tax sharing in between Local Governments of respective State / Union Territory combinations, as specified above.
  
  Note 2: It will be the responsibility of the Central Government & respective State Governments / Union Territories, to share and support Local Governments, those that are deprived of revenue, and to ensure Business Activity is generated and Growth happens everywhere, across the Country.
  
  

IV. NCT Tax Exemptions:

1. Financial Institutions: Specific to Received Deposit Transactions from Individuals / Organizations (i.e., deposits received in to Savings / Fixed Deposit / Recurring Deposit Accounts of Individuals, Current Accounts of Organizations, Nodal Accounts of Intermediaries). This applies to registered Banks (Public Sector Banks / Commercial Banks / Small Finance Banks / Payment Banks), but not for respective Subjects, unless exempted w.r.t. specific kind of transactions (like Loans), as per other clauses.
   
   
2. Non-Banking Financial Institutions (NBFC): Specific to Received Loan Transactions (those that are deposited into Subject’s Bank Account), from registered Banks (those that are authorized to lend in this scope, like Public Sector Banks / Commercial Banks) Only. This applies to registered Non Banking Financial Institutions (NBFC), that serve it’s audience in Home Loan / Gold Loan / P2P Lending Segments Only.
   
   
3. Micro-Finance Institutions (MFI): Specific to Received Loan Transactions (those that are deposited into Subject’s Bank Account), from registered Banks (those that are authorized to lend in this scope, like Public Sector Banks / Commercial Banks) Only. This applies to registered MicroFinance Institutions (MFI), that serve Micro Loan Segment Only.
   
   
4. Insurance Companies: Specific to Received Premium Deposit Transactions (those that are deposited into Subject’s Bank Account), from Individuals / Organizations. This applies to registered Insurance Companies Only.
   
   
5. Chit Fund Companies: Specific to Received Monthly Deposit Transactions (those that are deposited into Subject’s Bank Account), from Individuals / Organizations. This applies to registered Chit Fund Companies Only.
   
   
6. Post Offices: On Collected Deposits from Individuals. This applies to specific Saving Plans, with Post Offices as applicable.
   
   
7. Venture Capitalist Companies, w.r.t. Raised Funds: Specific to Raised Fund Transactions (those that are deposited into Subject’s Bank Account), from Individuals / Organizations, when creating a larger Venture Capital Fund. This applies to Venture Capital Companies Only.
   
   
8. Individuals, w.r.t. Sale of Immovable Property (Agriculture Land / Building / Apartment Flat / Plot):  Capital Gains Tax (as a concept is prominently applied in Income Tax Regime), will cease to apply on Sale of Property, in the NCT Tax regime. While Sale of Property (irrespective of whether it is Short-term / Long-term), is expected to happen at Market Value / Inflated Value, in that period of time, NCT Tax will be exempted in this scenario.
   
   
9. Individuals, w.r.t. Received Loans: Specific to Received Loan Transactions (those that are deposited into Subject’s Bank Account), from registered Financial Institutions / Non Banking Financial Institutions (NBFC) / Insurance Companies Only. This applies to Salaried, Self Employed, Farmers (in Individual Capacity) etc…
   
   Note: Since Individuals are not required to submit Tax Returns, these Loans have to be clearly depicted and marked accordingly, in the Tax Documents of Financial Institutions / NBFCs / Micro-Finance Institutions etc…, that issues these loans to Individuals.
   
   
10. Individuals w.r.t. Self Account Transactions: Specific to P2P Transactions, (those that happen between One’s Own Bank Accounts, in Savings / Fixed / Recurring Account Scopes, irrespective of whichever registered Financial Institution(s) (Same / Different Banks), they are maintained with and the more important thing here is that, these bank accounts are all identified and linked together with the Same Tax Identification Card, for example: PAN Card in India) of the Individual, only when, these P2P Transactions w.r.t. Self Account Transactions are exempt from NCT Tax Collection.
    
    
11. Individuals w.r.t. Designated Family Member Account related Transactions: Specific to P2P Transactions, (those that happen between the Individual’s Bank Account(s) and Designated Family Member(s) specific Bank Accounts (in Savings / Fixed / Recurring Account Scopes), irrespective of whichever registered Financial Institution(s) (Same / Different Banks), they are maintained with and the more important thing here is that, these bank accounts w.r.t. Designated Family Members, are all identified with the respective Individual’s Tax Identification Card, for example: PAN Card in India), and then linked together with a unique identifier, that represents this Individual as Primary Member and corresponding Designated Family Members as others in the Group, only when, these P2P Transactions that happens from the Bank Account(s) of the Individual to Bank Accounts of Designated Family Members, of the group, are exempted from NCT Tax Collection w.r.t. Designated Family Member Account Transactions.
    
    
12. Individuals w.r.t. Collection of Delegated Transactions: Specific to P2P Transactions, those that are done as Delegated Transactions, on behalf of Others, through the Individual’s Bank Account. NCT Tax will be exempted for this Individual, w.r.t. the particular Delegated Transaction Amount, as long as it is Collected directly into the Individual’s Bank Account (in Savings Account Scope), irrespective of whichever registered Financial Institution(s) (Same / Different Banks), the Bank Accounts of all involved Participants are maintained with, and specifically when these Bank Accounts are identified and linked with respective Individual / Organization’s Tax Identification Card, for example: PAN Card in India) in the process.
    
    Example: Individuals like Plumbers / Electricians etc… who does service at their Customer’s house / office, delivers required components and later charges their Customers, an amount that covers the Cost of Components, along with their Service Charge, under different headings. Here in this scenario, while the Service Charge of the Individual is surely taxed, as per Individual Specific Taxation Rate, the Total Sum Amount that is Collected w.r.t. Purchase of Components (also referred to as Delegated Transaction Amount) is exempted from NCT Tax Collection, as long as it is Paid into the Individual’s Bank Account.
    
    Note: Abuse of this Section may exempt Earned Revenue from NCT Tax Collection, but with any subsequent automatic / manual review, when the actions of the Individual are found guilty, then serious fines are applicable, in 2x to 5x capacity or even more, of the Earned Revenue (i.e. combined transaction value ) w.r.t. those Abused Transactions, in the process.
    
    
13. Organizations, w.r.t. Received Loans: Specific to Received Loan Transactions (those that are deposited into Subject’s Bank Account), from registered Financial Institutions / Non Banking Financial Institutions (NBFC) / Insurance Companies Only. This applies to Organizations in different scopes. This also covers Farmers who do farm on a registered Firm / Company Name, like any other Organization, in the process.
    
    
14. Organizations, w.r.t. Received Investments: Specific to Received Investment Transactions (those that are deposited into Subject’s Bank Account), from registered Financial Institutions / Non Banking Financial Institutions (NBFC) / Angel Investors / Venture Capitalists Only. This applies irrespective of whether the investment is received from Domestic / International Sources.
    
    
15. Startups, w.r.t.Received Financial Support, from Close Acquaintances: Specific to Received Financial Support Transactions (those that are deposited in to Subject’s Bank Account), from Family Members / Friends, in the scope of Individuals and / or through their Organizations. This applies irrespective of whether the Funds are received from Domestic / International Sources.
    
    
16. Professors / Students, w.r.t. Received Research specific Project Assistance: Specific to Received Project Assistance Transactions (those that are deposited into Subject’s Bank Account), from registered Financial Institutions / Non Banking Financial Institutions (NBFC) / Angel Investors / Venture Capitalists / Individuals / Organizations. This applies irrespective of whether the Project Assistance Funds are received from Domestic / International Sources.
    
    Note: Subjects can avail NCT Tax Exemptions, only when they Submit Tax Returns (with exemption to Individuals, as they are not required to submit Tax Documents), on time and as per Scheduled Tax Submission Deadlines.

V. NCT Tax Exemptions (Special Category):

1. Organizations, w.r.t. Received Donations: Specific to Received Donation Transactions (those that are deposited in to Subject’s Bank Account) from Individuals / Organizations. This applies to registered Political Parties, Non-Profit Organizations, Spiritual Organizations and only in the scope of Donations, those that are received from Citizens / Residents (i.e., Foreign Nationals with Active Visa) of the Same Country.
   
   
2. Organizations, w.r.t. Received Donations, in Special Purpose Funds: Specific to Received Donation Transactions (those that are deposited into Subject’s Bank Account) from Individuals / Organizations. This applies to registered Organizations, that are created to assimilate Funds (in Special Purpose Category, and in the scope of Price Control Fund, Disaster Relief Fund, Military Personnel / Veterans Support Fund, Chief Minister’s Relief Fund, Prime Minister’s Relief Fund, President’s Fund etc…) as Donations, those that are received from Citizens / Residents (i.e., Foreign Nationals with Active Visa) of the Same Country.
   
   Note: While the Subjects are still mandated to Pay NCT Tax, in the Organization’s Scope, they will be allowed to Claim the previously Paid Tax Amount, for the recent Assessment Year, as Total Refund, as long as they Submit Tax Returns, on time and as per Scheduled Tax Submission Deadlines, or else, no Refunds will be entertained thereafter w.r.t. that specific Assessment Year.

VI. How NCT Tax applies to Different Industries:

1. Financial Institutions: Net Interest Income (NII) i.e., Earned Interest on Loans, Loan Processing Fees, Loan Pre-closure Charges, Earned Transaction Fee w.r.t. NCT Tax / Customs Tax Collection Service (that will be shared by involved Financial Institutions / Payment Aggregators / Payment Gateways) etc… all comes under the ambit of NCT Tax, and are allowed to Claim Input Tax Credit / Refunds appropriately.
   
   
2. Financial Institutions / Forex Traders, w.r.t. Forex Transactions: Specific to Earned Income w.r.t. a Forex Trading Transaction (Sale / Purchase), comes under the ambit of NCT Tax , and are allowed to Claim Input Tax Credit / Refunds appropriately.
   
   
3. Stock Brokerages: Specific to Earned income w.r.t. a Stock Trading Transaction (Sale / Purchase), comes under the ambit of NCT Tax , and are allowed to Claim Input Tax Credit / Refunds appropriately.
   
   
4. Non-Banking Financial Institutions (NBFC): Net Interest Income (NII) i.e., Earned Interest on Loans, Loan Processing Fees, Loan Pre-closure Charges etc… comes under the ambit of NCT Tax, and are allowed to Claim Input Tax Credit / Refunds appropriately.
   
   
5. Micro-Finance Institutions (MFI): Net Interest Income (NII) i.e., Earned Interest on Loans, Loan Processing Fees, Loan Pre-closure Charges etc… comes under the ambit of NCT Tax, and are allowed to Claim Input Tax Credit / Refunds appropriately.
   
   
6. Real Estate Companies / Builders / Hotels: Earned Income w.r.t. Sale of Plot / Building / Agriculture Land / Apartment Flat etc… comes under the ambit of NCT Tax, and the Organizations in this sector, along with any ancillary business units are allowed to Claim Input Tax Credit / Refunds appropriately, only when the Sale happens at Market Value / Inflated Value. Any deviation will be considered as tax liability (as per Organization specific Tax Rate) on total received amount w.r.t. the Property Sale Transaction, and Tax Lien (Claim on Assets) will be imposed on the Property, unless and otherwise the total tax liability (after deducting the previously paid tax amount, w.r.t that specific transaction), along with interest / penalty, is collected from the Subject, in a stipulated time. In specific situations, the Tax Due, may be collected from the specific Organization’s Credit with the NCT Tax Department.
   
   
7. Real Estate Companies / Builders / Hotels / Hotel Aggregator Companies w.r.t. Rents: Earned Income w.r.t. Rents / Lease of Plot / Building /Agriculture Land / Apartment Flat etc…, and / or Commission Share on Rents of Hotel Rooms etc… comes under the ambit of NCT Tax, and the Organizations in this sector are allowed to Claim Input Tax Credit / Refunds appropriately.
   
   
8. Road / Rail / Air / Marine Transportation Companies: Earned Income w.r.t. Sale of Vehicles, from Base Model to Most Luxury Models etc… comes under the ambit of NCT Tax, and the Organizations in this sector, along with any ancillary business units are allowed to Claim Input Tax Credit / Refunds appropriately, only when the Sale happens at Market Value / Inflated Value.
   
   
9. Road / Rail / Air / Marine Transportation Companies / Cruise Ships / Cab Services / Travel Agents / Travel Booking Aggregators w.r.t. Travel Services: Earned Income w.r.t. Travel Booking, irrespective of Travel Mode, and in the scope of specific no. of Seats / a Vehicle etc… comes under the ambit of NCT Tax, and the Organizations in this sector are allowed to Claim Input Tax Credit / Refunds appropriately.
   
   
10. Insurance Companies: Net Interest Income (NII) i.e., Earned Interest on Loans, Earned Investment Income etc… comes under the ambit of NCT Tax, and are allowed to Claim Input Tax Credit / Refunds appropriately.
    
    
11. Chit Fund Companies: Earned Commission on managing Chits etc… comes under the ambit of NCT Tax, and are allowed to Claim Input Tax Credit / Refunds appropriately.
    
    
12. Post Offices: Earned Income on Postal Services (both normal and/or prioritized) and other income options, comes under the ambit of NCT Tax, and are allowed to Claim Input Tax Credit / Refunds appropriately.
    
    
13. Venture Capitalist Companies: Earned Investment Income on Sale of Equity, and any other income etc… comes under the ambit of NCT Tax, and are allowed to Claim Input Tax Credit / Refunds appropriately.
    
    
14. Angel Investors: Earned Investment Income on Sale of Equity, and any other income etc… comes under the ambit of NCT Tax, and Input Tax Credit / Refund Claims are allowed for Angel Investors in Organization scope, it is not, for Angel Investors in Individual Capacity.
    
    
15. Individuals: Earned Gross Income comes under the ambit of NCT Tax. Earned Income through Insurance Stocks, Direct Benefits Transfer (DBT), Rent on Movable / Immovable Properties etc… and any Derivative Income, like Earned Interest w.r.t. Bank Account Deposits (in Savings / Fixed / Recurring Account scopes), are taxed as per Individual specific Taxation Rate. This is applicable to Salaried / Self-Employed / Farmers in individual capacity and everyone working in Organized / Unorganized Sectors.
    
    Note 1: While Earned Income is still taxed for Senior Citizens, as per Individual specific Taxation Rate, Earned Interest w.r.t. Bank Account Deposits (in Savings / Fixed / Recurring Account scopes) is exempted specifically for Senior Citizens (Individuals with age 60 Years or above), in the process.
    
    Note 2: The Concept of Input Tax Credit / Refunds is not applicable to Individuals.
    
    
16. Individuals, w.r.t. Sale of Immovable Property (Agriculture Land / Building / Apartment Flat / Plot): While Sale of Property (irrespective of whether it is Short-term / Long-term), is expected to happen at Market Value / Inflated Value, in that period of time, any deviation will be considered as tax liability (as per Individual specific Tax rate) on total received amount w.r.t. the Property Sale Transaction, and Tax Lien (Claim on Assets) will be imposed on the Property, unless and otherwise the total tax liability, along with interest / penalty, is collected from the Subject, in a stipulated time.
    
    
17. Organizations: Earned Gross Income comes under the ambit of NCT Tax, and are allowed to Claim Input Tax Credit / Refunds, on industry specific business expenditure only. This applies to Organizations, and / or ancillary business units of any / all industries, those that are not explicitly mentioned in this section.
    
    
18. Organizations (that are not Real Estate Companies / Builders /Hotels) and w.r.t. Sale of Immovable Property (Agriculture Land / Building / Apartment Flat / Plot): While Sale of Property (irrespective of whether it is Short-term / Long-term), is expected to happen at Market Value / Inflated Value, in that period of time, any deviation will be considered as tax liability (as per Organization specific Tax Rate) on total received amount w.r.t. the Property Sale Transaction, and Tax Lien (Claim on Assets) will be imposed on the Property, unless and otherwise the total tax liability (after deducting the previously paid tax amount, w.r.t that specific transaction) , along with interest / penalty, is collected from the Subject, in a stipulated time. Any Organization, that is not a Real Estate Company / Builder, is not allowed to Claim Input Tax Credit / Refunds w.r.t. Sale of Immovable Properties.
    
    
19. Police Department: Earned Income in the form of Challans, Income earned from any Commercial Usage of allocated Property (example: Rent from Owned Building / Sale of Fuel in Fuel Stations),  and any other Income etc… comes under the ambit of NCT Tax, and are allowed to Claim Input Tax Credit / Refunds appropriately.
    
    Note: While the Subjects are still mandated to Pay NCT Tax, in the Organization’s Scope, they will be allowed to Claim Input Tax Credit / Refunds on the previously Paid Tax Amount, and for the recent Assessment Year, as long as they Submit Tax Returns, on time and as per Scheduled Tax Submission Deadlines, or else, no Refunds will be entertained thereafter w.r.t. that specific Assessment Year.
    

VII. Tax Collection Mechanisms:

1. Real-time Tax Collection, on P2P, P2M, B2B Transactions, Received Salary / Consultancy Fee / Amounts w.r.t. Sale of Proceedings in Individual scope, Received Donations from Individuals and / or Other Organizations, all in the scope of Acquirer Bank, that will be deposited to NCT Tax Department.
   
   
2. Tax Lien, a Claim of Assets, will be imposed on the Property of the Tax Defaulter, for the Outstanding Tax Liability, unless and otherwise the total tax liability along with interest / penalty, is collected from the Subject, in a stipulated time. This approach will be invoked on Individuals / Organizations, in scenarios that involve Sale of Immovable Property at Registration Value / Indexed Value and when the Subject is against paying the proposed tax (on the Total Received Amount w.r.t. Property Sale Transaction).
   
   This approach will also be invoked in other Scenarios, when the Subject (in the scope of Organization) evades paying the applied Reverse Charge w.r.t Cash Transactions (that is collected from it’s Customers) to the NCT Tax Department.
   
   
3. Tax Levy, also referred to as Attachment of Assets, will be used as the last option to Collect Tax Dues, after confirmation from the Tax Commissioner (Appeals) and / or Appellate Tribunal. This involves the legal seizure of Subject’s (Individual / Organization) Assets to fulfill Tax Due Collection (as defined in the scope of previously invoked Tax Lien, w.r.t. the Tax Due Claims).
   
   

VIII. Tax Appeals:

1. The Subject (Individual / Organization) can dispute a Real-time Tax Collection attempt, w.r.t. Earned Revenue in any happened transaction (specifically when the Subject feels the applied tax is inappropriate), by raising a Ticket to Taxation Support Team of the NCT Tax Regime. While Legitimate Disputes Requests can be raised any time, abuse of the Dispute System will attract serious fines, as a consequence, and in the scope of 2x to 5x of the previously collected / disputed tax value, as will be finalized by the Tax Commissioner in the process.
   
   
2. The Subject (Individual / Organization) can Counter issued Tax Liens by appealing with the Tax Commissioner (Appeals), and if the appeal is dismissed, then that can be escalated by appealing with the Appellate Tribunal.
   
   

IX. Other Measures:

1. Encourage Citizens / Residents in Individual scope, to register for a Tax Identification Card (Example: PAN Card in India), at a younger age (when the Subject is a minor / student).
   
   
2. Include basics of Financial Inclusion & Tax Compliance in School Textbooks, and that Financial Discipline / Tax Awareness topics have to be extended with increasing age, to nurture the growing perception of the Child / Student.
   
   
3. With increased awareness campaigns about Pros & Cons of Digital / Cash Transaction approaches, do encourage more and more Subjects to Go Digital over a finite period of time.
   
   
4. Do apply soft upper limits on Cash Transactions (Rs.50,000, for Indian Citizens / Residents), w.r.t. received payments for Organizations, and to reduce the Upper Limit of Cash Transactions gradually (Rs.5000 or lesser, for Indian Citizens / Residents), in a finite period of time, i.e., 1 to 2 Years, while encouraging the Digital adopters in the Hall of Fame.
   
   
5. Do encourage Individuals, to receive deposits / participate in P2P Transactions, all in Digital Mode, for them to enjoy real-time taxation on Credits & automatic tax compliance, while being exempted from the Tax Return Submission process.
   
   
6. Do mandate Organizations, to apply reverse charge on all cash transactions (those that happen between an Individual & Organizations), for them to explicitly make Tax Payments and to thereby be allowed to Claim Input Tax Credit / Refund, as applicable w.r.t. Business Purpose Expenses, post timely Tax Return Submissions.
   
   
7. All the above is to primarily encourage Transactions, Tax Compliance, Tax Discipline through Digital means and to take the Country forward as a 80% to 90% Digital Majority Economy, while Organizations still accept minimal amount transactions w.r.t. Cash Transactions, and to support the needs of specific audiences, who are doing catch-up with Digital Transaction Mode.
   
   
8. Add an Extra Flag for Auto / Manual Verification, for Organizations, and w.r.t. collected Reverse Charge on Cash Transactions, in P2M Transaction Scenario.
   
   
   

X. How to Convert Deficit into Surplus?

1. Establish Simple and Progressive Economic Growth Policies, with considerations towards region specific Pros & Cons, thereby encouraging Agriculture / Industries appropriately.
   
   
2. While NCT Tax offers Flat Tax Rates separately for Individuals / Organizations, and at Transaction level, it brings in Predictability in assessments, so Revenue Deficit will naturally be a thing of the Past, over a period of time.
   
   
3. Growing Productivity and Availability beyond local usage, naturally enables Exports and when that is supported by Global Marketing capabilities, more opportunities and jobs can be created, and trade surplus with a good economic output will be a natural outcome, that can be measured in terms of growth in GDP of the Country.
   
   

XI. How NCT Tax applies to Individuals?

1. This works as a natural replacement of Income Tax, by allowing the Subjects to Pay Tax on Gross Income and in the Transaction Level, with Predictability, Ease and for Maximizing Compliance in the process.
   
   
2. There will be a Single Tax Slab to Individuals, irrespective of if the Subject is a Salaried / Self-Employed Person / Farmers (in Individual Capacity) etc…, without any disparity among the Subjects.
   
   
3. Digital Economy is more Conducive to Collect Tax, when compared to Cash Economy, and all Earned Revenue is expected to be received into respective Bank Accounts of Subjects.
   
   
4. Unlike in the Regime of Income Tax, where certain kind of investments are driven in the scope of tax savings, the NCT Tax Regime encourages all Subjects to plan their investments, as per their specific interests / future plans, rather than limiting themselves in the lines of tax deduction classifications like 80A / 80B / 80C / Capital Gains Reinvestment criteria etc…
   
   
5. Individuals are freed from IT Return Submission mandates and corresponding deadlines, as tax collection happens in real-time, and before the transaction is settled to the recipient (Individual), through the Acquirer Bank of respective transaction.
   
   
6. No more requirement to pay Capital Gains Tax on Sale of Property, as long as the Sale happens at Market Value / Inflated Value, in that period of time. Any deviation will attract NCT Tax on the total received amount w.r.t. the Property Sale Transaction, with interest & penalty.
   
   
7. No more requirement to pay Property Tax on Real Estate Properties, as NCT Tax supersedes Property Tax, by Taxing Rent Transactions etc…, like any other transaction, at standard tax rates.
   
   
8. No more Transaction Fee on amounts that are received by the Individual through Digital means, in the scope of P2P Transactions, Salary / Consultancy Fee Payouts, Received Amounts w.r.t. Sale of Proceedings, Direct Benefits Transfer (DBT) etc…. irrespective of Payment Method (Credit Card / Debit Card / NetBanking / Cheque / Wallet etc…), as this will be taken care of by the Government, with Tax Collection happening in the Transaction Level.
   
   

XII. How NCT Tax applies to Organizations?

1. This enhances the Ease of Doing Business experience further, by allowing the Subjects to Pay Tax on Gross Income and in the Transaction Level, and by facilitating a much simplified Tax Compliance process, in the Post GST Era.
   
   
2. There will be a Single Tax Slab to Organizations, that allows the Subjects to Claim Input Tax Credit / Refund, for all expenses that happen for Industry specific Business Purposes Only.
   
   
3. As the Tax Collection happens in the Transaction Level, Digital Economy is more preferable, when compared to Cash Economy, and Compliance Processes will be more easier, for Digital Transactions when compared to Cash based Transaction alternatives.
   
   
4. The adoption can potentially happen in a quicker way, as this system micro optimizes the taxation processes at different levels, while making NCT Tax Return Document Preparation / Submission, easier to the Subjects.
   
   
5. Sale of Plot / Building / Agriculture Land / Apartment Flat etc… is expected to happen at Market Value / Inflated Value, in that period of time. Any deviation will attract NCT Tax on the total received amount w.r.t. the Property Sale Transaction, with interest & penalty.
   
   
6. No more requirement to pay Property Tax on Real Estate Properties, as NCT Tax supersedes Property Tax, by Taxing Rent Transactions etc…, like any other transaction, at standard tax rates.
   
   
7. No more Transaction Fee on amounts that are received by the Organization through Digital means, in the scope of P2M / B2B /Organization 2 Organization Transactions. While MDR – 2% to 5%, that used to be charged on Transaction Amount, all basing upon Issuer of corresponding Payment Instrument, for Online Payments (E-Commerce etc…) / In-Person Payments (Payments in Shops using POS Machines / QR Code Scan / NFC Chip interaction etc…), irrespective of Payment Method (like Credit Card / Debit Card / NetBanking / Cheque / Wallet etc…), it will not be charged anymore, as this will be taken care of by the Government, with Tax Collection happening in the Transaction Level.
   
   

XIII. How NCT Tax enables Farmers / Self-employed / Small to Medium Scale Businesses?

1. Credit History will be Created, to everyone in the Unorganized Sector, right from Farmers (in Individual Capacity) to Self-employed to Small & Medium Scale Businesses along with all other sections in the Country.
   
   
2. Credit Line / Loans become very much affordable to all subjects, with increased deposits in Banks.
   
   
3. While the rate of received interests on bank deposits will reduce a bit to Savings / Fixed Deposit Accounts, specific exemptions can be defined, to ensure reasonable interest is provided to bank deposits of Senior Citizens.
   
   
4. By maintaining balance between Supply & Demand, and with a supporting environment for exports, huge foreign currency reserves can be made, thus enhancing lives across, in the country, for anyone to thrive, with consistently made organized effort.
   
   

XIV. How NCT Tax enables Governance?

1. This empowers the Governments at different levels, to address several priorities, as defined in the Budget.
   
   
2. This allows Central Government to focus on Policy Creation and Execution in the scope of Education, Healthcare, Defense, Agriculture, Science & Technology, Cyber Defense etc…, while balancing between Gross Domestic Product (GDP) & Gross National Happiness Index (GNH), all while encouraging the Spirit of Technology Research & Entrepreneurship across the Country.
   
   
3. This allows the State Government / Union Territory Government to make coordinated efforts with the Central & Local Governments, while focusing on empowering people in the region, in all respects.
   
   
4. This allows Local Government to go in sync with Central & State / Union Territory Governments, while prioritizing pressing local issues, in the process of supporting farmers and industries at ground level execution, for an overall enhancement of financial stability and lives of people in the locality.
   
   
5. No more gold rush w.r.t. Dis-investments in several industry segments, as the Government will have adequate Fund Support for Citizen Empowerment and Social Welfare scenarios, that includes Education / Healthcare / Insurance and to ensure balance in specific other sectors, while giving freedom to Regulators w.r.t. Different industry segments.
   
   
6. Huge Job Creation in Government & Private Sector, specifically w.r.t. Information Technology / Artificial Intelligence / Cloud Computing and last but not least, The Cyber Defense, due to increased availability of funds, and as the Country becomes a major Digital Economy.
   
   
7. No more Unaccounted for Money / Black Money in the Country, as Accountability prevails in the scope of Tax Collection on Legitimate Income Source of Individuals / Organizations, and with measures for maximizing Tax Compliance of all Subjects, while punishing anyone with Tax Levy who crosses the line, severely in due course.
   

XV. Quick Comparison between Income Tax and Non-Cascading Transaction Tax (NCT):

The following is the quick comparison between Income Tax and the being proposed Non-Cascading Transaction Tax (NCT), and some of the important aspects include:

Income Tax	NCT Tax
1) This applies to both Individuals and Organizations and happens based on Net Income.	1) This is being proposed as a replacement of Income Tax, Goods & Services Tax and Property Tax, to Individuals, and will be calculated basing upon Gross Revenue.
2) Multiple Slabs and Tax Exemption options available, for Individuals and / or Organizations, in different scopes.	2) A Single Slab option with a Fixed Percentage based Tax Component, is being proposed for Individuals, with tax exemptions applicable w.r.t. a specific kind of transaction (as detailed in NCT Tax Exemptions section above).
3) Can benefit with increased Digitization, even though it survived the Cash Economy.	3) Preferably Digitized Economy is a more conducive environment, for Individuals w.r.t. the being received P2P Transactions, Salary / Consultancy Fee Payouts, Received Amounts w.r.t. Sale of Proceedings, Direct Benefits Transfer (DBT) etc….
4) Indirectly drives growth in different segments, for most of the Individuals and Organizations, as they do investments and / or Corporate Social Responsibility (CSR) expenditure to ensure maximum benefit is received w.r.t. Tax Exemptions.	4) Drives Pro-active investment and future Security / Growth perspectives, as tax collection happens at a minimum value, while inclusively being collected from everyone, across the Country. There are some exemptions w.r.t. a specific kind of transactions (as mentioned in NCT Tax Exemptions section above), to Individuals, while allowing them to proceed forward, as per their practical investment plans.
5) Need to submit timely IT Returns, to avail Eligible TDS Refunds, all after taking into account, the previously paid Advance Tax, Tax Exemption Eligibility Criteria and possible Capital Gains Tax Payment Scenarios, into consideration.	5) Tax Return Document Submission as a requirement, is abolished for Individuals, in NCT Tax Regime, as taxation happens at Transaction Level, while considering the Transaction Exemption Scenarios (as specified in NCT Tax Exemptions section and / or Other Measures section, those that are presented in the above sections).
6) Capital Gains Tax is applicable to both Individuals / Organizations.	6) Capital Gains Tax is abolished in the NCT Tax Regime. While Sale of Property (w.r.t. both Short-term / Long-term) is expected to happen at Market Value / Inflated Value, any deviation, will attract NCT Tax, on total received amount w.r.t. the Property Sale Transaction.
7) 5% to 30% Tax will be collected on the declared Net Income, that is arrived at, after considering all applicable tax deduction and tax exemption sections, from Individuals, whose Net Income is greater than Rs.250,000 in India. 25% to 30% Tax will be collected on the declared Net Income, that is arrived at, after considering all applicable tax deduction and tax exemption sections, from Organizations, in India. Based on Eligibility, certain kinds of Organizations like Non-Profit, Spiritual & Political Parties etc… are exempted from paying Income Tax, in India.	7) 3% Tax will be collected from Individuals on their Gross Income, as deposited in / Paid to their bank accounts.

XVI. Quick Comparison between Goods & Services Tax (GST) and Non-Cascading Transaction Tax (NCT):

The following is the quick comparison between Goods & Services Tax (GST) and the being proposed Non-Cascading Transaction Tax (NCT), and some of the important aspects include:

Goods and Services Tax (GST)	NCT Tax
1) This applies to both Individuals and Organizations and happens based on Gross Revenue.	1) This is being proposed as a replacement of Income Tax, Goods & Services Tax and Property Tax, to Organizations, and will be calculated basing upon Gross Revenue.
2) Multiple Slabs are available, for registered Subjects to pay tax, all basing upon industry.	2) A Single Slab option with a Fixed Percentage based Tax Component, is being proposed for Organizations, with tax exemptions applicable w.r.t. a specific kind of transaction (as detailed in NCT Tax Exemptions section above). This allows the opportunity to receive Input Tax Credit / Refund, on Business specific Expenditure, while facilitating the Subjects with a set of Simple & Easier Compliance processes.
3) Can benefit with increased Digitization, even though this taxation concept survived Cash Economy.	3) Preferably Digitized Economy is a more conducive environment, for Organizations w.r.t. the being received P2M / B2B Transactions and Donations from Individuals and / or other Organizations etc…, even though this concept of NCT Tax can still survive a Mixed Cash / Digital Dual Stack Economy w.r.t. Organizations.
4) This is a Consolidation of many different taxation systems like Sales Tax, VAT, Entertainment Tax, Service Tax etc…	4) A Similar Initiative to GST in the scope of certain procedures, for all Organizations, but with enhanced Simplification, and for maximizing adoption & compliance.
5) Need to submit timely GST Returns, to avail Eligible Input Tax Credit / Refunds, after taking into account the previously paid Advance Tax, while also considering the Business Specific Expenditure to GST Registered Organizations.	5) Timely Tax Return Document Submissions enables the Subjects to avail Eligible Input Tax Credit / Refunds, on industry specific business expenditure only and this can be adopted across, as NCT Tax will have automation in the scope of Tax Collection and simplification, in terms of Tax Return Document Preparation / Submission, to Organizations.
6) 5% to 28% Tax will be collected on Gross Income, all based upon Industry, while exempting few Goods & Services, from Organizations / specific Individuals in India.	6) 6% Tax will be collected from Organizations, and across industries, on their Gross Income, as deposited in / Paid to their bank accounts along with any reverse charges, those that are collected w.r.t. Cash Transactions.

XVII. Comparison between Property Tax and Non-Cascading Transaction Tax (NCT):

The following is the quick comparison between Property Tax and the being proposed Non-Cascading Transaction Tax (NCT), and some of the important aspects include:

Property Tax	NCT Tax
1) This applies to both Individuals & Organizations, in the scope of Real Estate Properties.	1) Proposed to Replace Income Tax, GST Tax, and Property Tax, thus NCT Tax and Customs Duty prevails thereafter.
2) This is charged on Property Value and on Income that is generated upon those Properties, after application of relevant deductions / exemptions.	2) This is charged as per respective Flat Tax Rates to Individuals / Organizations, on Earned Rent etc… w.r.t. Real Estate Properties. Transaction Tax for Individuals: 3%. Transaction Tax for Organizations: 6%.
3) This is Collected by Local Governments like Municipalities / Municipal Corporations etc…, on Semi-Annual / Annual basis.	3) Tax Collection happens on real time from the Beneficiary, before the amount is settled to the Beneficiary.
4) This will be the Primary Income Source for Municipalities / Municipal Corporations, to run Public Schools, Roads etc… in the Town / City.	4) Since, NCT Tax happens implicitly on Rent Collection etc… At the time of Transaction, the collected amount will be distributed from NCT Tax Department to Central Government, State Governments / Union Territories / Local Governments at respective tax sharing definitions, based on Transaction Origin / Destination and on periodic basis.
5) Exemptions have to be clearly depicted in Income Tax Returns.	5) No Tax Returns to Individuals, while Tax Returns still prevail for Organizations, with no specific need to demarcate Rent Transactions explicitly in those Tax Returns.

Summary:

Direct Taxation Systems like Income Tax, Property Tax etc… are mainly focused on Salaried / Self-employed Individuals and Organizations, are higher in value and that is happening in minimum to moderate scopes on average, after Subjects avail all applicable deductions, in the process.

On the Other hand, In-direct Taxation Systems like Goods & Services Tax (GST), is covering a larger base, of Organizations and Individuals, all based on a lot of feedback, that is coming in, with amendments for it to become a very much adopted in-direct taxation system.

But what any Government of any Country (that primarily depends on tax) needs to do is, to Create a more inclusive & seamlessly happening Transaction Level taxation system, that is non-cascading and that applies to all Citizens / Residents, in Individual / Organization scopes (while simplifying Compliance Procedures), for it to focus on governance, and in involving everyone, in the Growth Story of that Country.

Finally, I welcome everyone to come forward and collaborate, by sharing your thoughts / feedback / comments on this Taxation specific Policy Reform Proposal, for us to collectively and inclusively make this proposal to the Government in appropriate times…

Addendum:

1. Frequently Asked Questions
   
   https://www.idealnation.net/2019/04/28/faqs-on-non-cascading-transaction-tax/
   
2. A Comparison between the Automated Payment Transaction Tax (APT) and Non-Cascading Transaction Tax (NCT)
   
   https://www.idealnation.net/2019/04/23/a-comparison-between-the-automated-payment-transaction-tax-apt-and-non-cascading-transaction-tax-nct/
   
3. A Comparison between Banking Transaction Tax (BTT) and Non-Cascading Transaction Tax (NCT)
   
   https://www.idealnation.net/2019/04/23/a-comparison-between-banking-transaction-tax-btt-and-non-cascading-transaction-tax-nct/
   
4. A Comparison between Banking Cash Transaction (BCCT) Tax and Non-Cascading Transaction (NCT) Tax
   
   https://www.idealnation.net/2019/04/23/a-comparison-between-banking-cash-transaction-bcct-tax-and-non-cascading-transaction-nct-tax/
   
5. Tax Paying is Every Citizen / Resident’s Right, Isn’t it?
   
   https://www.idealnation.net/2019/04/14/tax-paying-is-every-citizen-resident-right-isnt-it/
   

Transaction Tax Proposals by Others (as found on the internet):

The following are the two transaction tax proposals that are found in the public domain and on the internet archives.

1. Automated Payments Transaction Tax (APT) by Mr.Edgar L. Feige
   
   https://web.archive.org/web/20120321195121/http://129.3.20.41/eps/pe/papers/0506/0506011.pdf
   
2. Banking Transaction Tax (BTT) by Mr.Anil Bokil of Arthakranti
   
   http://www.arthakranti.org/proposal
   

The proposal can be downloaded as a PDF File by clicking on the following link: