Pankaj Chaudhary, the Minister of State (MoS) for Finance, informed the Parliament that the Centre is investigating 642 offshore gaming, betting, and gambling organisations for possible tax fraud. Chaudhary further stated that the finance ministry is collaborating with the electronics and IT ministry (MeitY) to prohibit these websites in a written response submitted to the Lok Sabha.
“642 offshore companies that offer internet gambling, betting, and money gaming have been found so far for inquiry. According to the guidelines of Section 14A(3) of the IGST Act, 2017, MeitY has been notified to restrict the websites and URLs of the offshore online gaming companies that were discovered to be unresponsive and uncooperative during the investigation, Chaudhary stated. Selvaganapathi TM, a DMK MP, asked the minister if the Centre had any reciprocal agreements with other countries for exchanging information on tax avoidance by such organisations. The MoS Finance said that no such arrangements exist.
Expanding Nexus of Illegal Betting Platforms
The CEO of the industry group All India Gaming Federation (AIGF), Roland Landers, stated earlier this year that offshore unlawful betting platforms cost the national exchequer a staggering $2.5 billion in goods and services tax (GST) income annually. The current regulations mandate that all offshore online gaming businesses operating in the nation, regardless of whether they provide skill-based or chance-based games, establish a subsidiary in India or designate a representative to pay taxes on money received from clients. For real money gaming, all gaming platforms in the nation are required to pay a 28% GST on the full face value of bets.
28% GST Regime
Last year on October 1st, the 28% GST regime went into force. Many stakeholders and industry participants argued that the new regulation will negatively affect the domestic online gaming market and called for its reversal. The Centre, however, remained steadfast. Online gaming companies’ collections increased 412% year over year (YoY) to INR 6,909 Cr in the six months following the new regime’s implementation (October 2023 to March 2024).
The Central Board of Indirect Taxes & Customs, Department of Revenue, Ministry of Finance, is home to the former Directorate General of Central Excise Intelligence (DGCEI), now known as the Directorate General of GST Intelligence (DGGI). This top intelligence agency is tasked with gathering, compiling, and disseminating information about the evasion of the Goods and Services Tax (GST), which was implemented on July 1, 2017, and the duties of the Central Excise and Service Tax throughout India.
The Directorate General has a variety of responsibilities when it comes to combating the threat of duty avoidance. Through its nationwide intelligence network, it gathers intelligence, particularly in emerging areas of tax evasion, and disseminates it by sending out Modus Operandi Circulars and Alert Circulars to advise field formations of the most recent developments in duty avoidance. When it is deemed essential, this Directorate General conducts operations to uncover GST, Central Excise Duty, and Service Tax evasion, either alone or in coordination with field forces.
A total of 78 instances were investigated by the Directorate General of GST Intelligence (DGGI), which is the central investigative and anti-evasion arm of the finance ministry. The DGGI discovered the highest-ever goods and services tax (GST) evasion by the online money gambling industry, which amounted to INR 81,875 crore in FY24.
The Directorate General of Income Tax (DGGI) stated in its most recent annual report that it discovered a record 6,084 instances of tax evasion in 2023-24, involving INR 2.01 trillion in GST. This figure is twice as high as the INR 1.01 trillion that was discovered in FY23 over 4,872 cases.
There 46% of the incidents of tax evasion were related to the non-payment of taxes through clandestine supply and undervaluation, 20% involved fraudulent Input Tax Credit (ITC) claims, and 19% pertained to incorrect ITC claims or refusal to reverse them. These figures were noted in the report.
Similar Cases Were Witnessed in Other Sectors
The Banking, Financial Services, and Insurance (BFSI) sector came in second place, with a total of INR18,961 crore being evaded over 171 cases. Additionally, the pharmaceutical industry (22 cases, INR 40 crore) and works contract services (343 cases, INR 2,846 crore) were among the other industries under consideration.
Moreover, during the fiscal year 24 (FY24), there were 1,976 instances of GST evasion that were discovered in the iron, copper, scrap, and alloys industries, with a total value of INR 16,806 crore. The industries of pan masala, tobacco, cigarettes, and bidi came in third place in terms of evasion, with 212 instances totalling INR 5,794 crore. There were also other industries, such as plywood, lumber, and paper (238 instances, worth INR 1,196 crore), electrical devices (23 cases, worth INR 1,165 crore), and marble, granite, and tiles (235 cases, worth INR 315 crore).
Announcement to Form Inter-Departmental Committee
In addition, the DGGI report suggested the establishment of an interdepartmental committee that would include representatives from the Enforcement Directorate, the Reserve Bank of India, tax authorities, and consumer affairs departments. The purpose of this committee would be to combat the proliferation of online gaming platforms and ensure compliance with regulatory requirements.
Consequently, the time has come to implement a multi-pronged strategy in order to address this area. Regulatory compliance, consumer protection, and national security are all topics that were discussed in the report that was only recently made public by the DGGI. The intelligence wing of the Goods and Services Tax (GST) has taken action against 118 domestic online gambling businesses and issued show-cause notifications to 34 taxpayers, involving a total tax amount of INR 1.1 trillion. These businesses had failed to pay the GST at the specified rate of 28%.
The income tax (I-T) department has reportedly uncovered instances of tax evasion totaling around Rs 10,000 crore over three years, as per credible sources. The evasion is believed to have been perpetrated by online retailers marketing their products through social media channels like Instagram and Facebook. Notices have been issued to 45 brands operating nationwide, and it is anticipated that additional companies will receive similar notifications in the near future. These companies are alleged to have either neglected tax payments or provided inaccurate information regarding their incomes, according to insider information.
A high-ranking official, discussing the issue, shared insights with a publication, declaring, “Beyond significant eCommerce entities, we are actively overseeing operations on Instagram and Facebook, revealing a suspected evasion amounting to roughly Rs 10,000 crore.” Notifications from the Income Tax (I-T) department were sent out from the final week of October to November 15, covering evaluation periods from 2020 to 2022.
The report identifies the 45 companies involved in sectors such as apparel, jewelry, footwear, bags, and gift items. This roster comprises well-known retailers utilizing social media platforms for consumer outreach. Several of these companies, which received the I-T notices, were also involved in international product sales.
India boasts over 230 million active Instagram users, the highest globally, and more than 314 million Facebook users. Government sources assert that the 45 entities in question exhibit significant turnovers. An official elaborated on the sales activities of these companies, revealing, “They operate small shops and warehouses, primarily selling through Instagram, with turnovers exceeding Rs 110 crore, while their reported income tax returns were only Rs 2 crore.”
Following the impact of COVID-19, there was a noticeable upswing in the number of retailers utilizing these platforms, known for their substantial user engagement. The official noted that three Mumbai-based saree eTailers attracted the attention of the tax department after sponsoring a high-profile fashion show.
Most of the transactions involving these online retailers were conducted through UPI, facilitating the I-T department’s ability to trace these financial activities. Despite the increasing trend of individuals leveraging social media for retail purposes, such income often goes unreported, leading to the non-payment of taxes.
Social Commerce Surpasses Ecommerce Dominance in India
In 2022, the projected market size for social commerce in India stands at seven billion U.S. dollars, with expectations of an increase to 84 billion U.S. dollars by 2030. eCommerce has dominated the market for over a decade, leading to a discernible shift towards social commerce, which is poised for significant advancement.
Market Size of Social Commerce in India in 2019, With Forecasts From 2022 Until 2030
Social commerce involves the direct selling and purchasing of products or services through social media platforms, encompassing every aspect from product discovery to the entire checkout process, shaping a holistic shopping experience for consumers.
The prominence of social commerce is evident in the State of Social Media Investment Report, revealing that 77% of consumers are likely to favor enterprises offering a superior social media experience. Surprisingly, four-fifths of social media marketers anticipate consumers will increasingly buy directly from social apps rather than brand platforms or third-party eCommerce portals in 2023.
While many companies engage in sales through both eCommerce sites and social media handles, in India, the bulk of social commerce transactions are propelled by new brands and first-time entrepreneurs. With the continuous surge in social media users, brands are innovating strategies to convert captive audiences into customers.
Given that people spend an average of three hours daily online—engaging in activities such as posting, scrolling, viewing videos, and messaging—this presents a crucial window of opportunity for brands to target consumers through their marketing tools.
Unlike transactional buy-and-sell models, social commerce focuses on building a dedicated community around a brand. Brand development hinges on loyal fans or followers who praise and promote the brand, contributing to a robust community or consumer base in a short period. Social commerce differentiates itself by leveraging influencers for product marketing, fostering community creation efficiently.
The authenticity of feedback within social commerce is bolstered by a strong presence on social media and community connections, providing organic and genuine feedback. With its distinct advantages over traditional eCommerce methods, there is a growing global belief that social media represents the future of eCommerce.
The trajectory of social commerce indicates sustained growth in the years to come, driven by approximately 70% of the nation’s population actively using social media. Presently valued at $2 billion, industry analysts anticipate the social commerce market in India to grow at a CAGR of around 50 to 60% over the next five years.
In light of these statistics, it is evident that brands adept in social commerce are strategically investing time, money, and resources to enhance their success through this evolving platform. This increased success, however, has also attracted the attention of the income tax department.
The power of a Human Mind is astonishing. Just by looking at the past few inventions, one can understand, what the human mind is capable of. In the present age, everything is possible with just a simple click, from shopping to dating. It wouldn’t be wrong to say that we are carrying the whole world in our pockets, thanks to technological advancement. One of the biggest contributors to carrying the world in our pockets is Apple Inc.
The world’s biggest technology company that deals with electronics and computer software first started its journey in 1976. It was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne.
Till 2011 Steve Jobs was the CEO of the technology giant. Later in that year, after the death of Steve Jobs, Tim Cook took the charge of Apple. These are just basic facts that almost everyone knows about Apple. Let’s come to the point that makes this article interesting.
Regardless of how much money we make, taxes are very painful for all of us. But on the one hand, people like you and me sincerely pay our taxes. On the other side, there are companies like Apple, and Google that evaded their taxes by billions of dollars.
The question is what is this genius tax-evasion strategy and how do they escape the strict laws of governments? Let’s try to understand by using Apple as a case study.
With great powers, comes great responsibility, and so do pay taxes to the government of the country they live in. Apple being the biggest tech company is not an exception. It is bound to pay a large sum of amount to the Government in the form of taxes.
Just like other businesses, Apple is also not that fond of paying billions of bucks in taxes but has no choice but to be responsible to the country. Somehow, Apple used a tactic to avoid paying billions to the Government. Well, the secret is, not so secret. Apple transfers most of its profit to tax haven countries and thus takes advantage of loopholes, the US Government has in its tax-paying system.
“Play by the rules, but be ferocious”– Phil Knight
As part of its tax avoidance strategy, Apple uses its ‘subsidiaries’ in Tax havens. Now, to understand this more deeply, first let’s try with the term, Tax Haven.
True to its name, the term ‘Tax Haven’ is used for all those countries that offer, foreign investors the to pay minimal and sometimes even no taxes for their businesses. This is basically a good scheme for the investors to avoid paying taxes to the actual country the individual or business belongs to. Another attractive part of this ‘heaven’ is that they occasionally offer financial secrecy to the investors.
Some of the top Tax havens are:
Ireland
Netherlands
Switzerland
Panama
Bermuda
The Cayman Islands
Luxembourg
The Tactics Apple Uses For Tax Avoidance
Every time Apple has stated that it has always played by the rules and has paid taxes to the Government as per the laws. In fact, it considers itself the largest taxpayer in the world. This is somewhat true, in 2017, Apple stated that it had paid over $35 billion dollars in the last three years. However, that amount wasn’t able to make even a small dent in the revenue of Cook’s led multinational company. How?
Well, the strategy is to transfer their profit, obtain domestically to Tax Haven countries. Apple uses Ireland and Luxembourg as its ‘Haven’ to get away from paying the lump sum.
Agreement Between Ireland and Apple
Apple has been operating in Cork, Ireland since 1980 for its overseas operations, and they also set up a manufacturing plant in Holyhill, above Cork.
In 1990, when Apple’s market share was crumpling worldwide, they wanted to save money. Apple’s CEO John Sculley signed a deal with the Irish government. In 1990, Apple’s team met with the Irish government and drafted an arrangement for how much tax it paid in the country.
Since then, Apple has been the largest employer in Cork, Ireland, where they had an upper hand. Apple disclosed to the Irish government that the firm is examining its worldwide operations and Apple desires to establish a profit margin on its Irish operations.
Based on the financial data from 1989, Apple showed $751 million dollars in revenue and $270m in net profit per year. Apple also showed that these profits were made mainly through its technology, marketing, and manufacturing.
They told the Irish government that they only manufacture in Ireland. Therefore, they should not be taxed on the other two elements of business: marketing and technology. Apple has been in Ireland for 10 years and if they do not strike a deal, they will go somewhere else.
Apple’s revenue generated from India, Europe, and the Middle East is taxed in Ireland
The Irish government agreed to the deal offered by Apple in 1991 to tax only certain elements of the business. This made Apple’s taxes suddenly drop to 12.5%, compared to the US (21%). All of Apple’s revenue generated from India, Europe, and the Middle East is taxed in Ireland.
But an investigation by the EU revealed that Apple has paid only 1% or 0.5% taxes instead of 12.5%. They also accused the Irish government of collusion with Apple, because Ireland does not want Apple the largest employer in the country to leave Ireland.
Apple’s Strategy of Creating Two Subsidiaries
Apple’s operation strategy before 2017
Apple created two subsidiaries in Ireland, “Apple sales International“to hold rights of Apple intellectual property to sell and under a “cost-sharing agreement” with Apple Inc. to manufacture outside of South and North America named “Apple Operations Europe“. The Head office of these companies is on paper only and they are controlled by board members mainly based in the US.
Now, these two companies yearly only pay for research and development to Apple Inc. in America. By doing this Apple sales International kept all the revenues and profits generated from India, Europe, and the Middle East.
In 2011, According to US Senate, Apple sales International recorded a profit of $22 billion. But under the agreement with the Irish government only $50 million were taxed and it kept decreasing until 2014.
Before 2017, the US tax system doesn’t put taxes on the profit obtained from the multinational company’s foreign subsidiaries unless they are transferred to the parent company as dividends (changed in 2017). Which is, while compared with the foreign country taxes, is way much higher.
There is a term called ‘Deferred Tax’, which means the income tax that a company will pay in the near future instead of paying immediately, which might be a big shock to the bank balance.
Apple has taken that advantage by transferring over 70% of its domestically obtained profit to the tax haven, thus putting those profits in the deferred tax category of the company.
As per a report from 2017, Apple was avoiding paying almost $78 billion dollars of taxes at that. In Ireland, Apple had three subsidiaries, which played a significant role in the game of Tax Avoidance.
Unfortunately, this game has not been a smooth ride for the technology giant. It has to face some consequences for its tax avoidance strategy.
In 2013 an investigation revealed that two of the subsidiaries of Apple in Ireland are formed in a way that has helped them in avoiding paying taxes to both the country, U.S. and Ireland.
On 29 August 2016 European Commission declared that Apple has used Ireland, and had received illegal tax benefits from the country.
The European Commission instructs Apple to pay almost $15 billion dollars along with interest to Ireland for not confiding with the rules and not paying proper taxes.
The Irish Government took the side of the tech giant and stated that no tax law has been violated.
In the month of November of the same year, Tim Cook appealed against the instruction.
In 2018, Apple paid around €14.3 billion in back taxes and interest that was due to Ireland. The money was held in an Escrow fund.
Present Condition of Apple and Taxes
After a long battle with the European Commission, in July 2020, the European General Court gave a decision in favor of Apple and the Irish Government.
This automatically became good news for the Technology giant as it does not have to pay a huge amount. At present, the European Commission has decided to appeal again, and this time in front of the highest court, the Court of Justice of the European Union (CJEU).
Conclusion
The bigger the business, the bigger will be the risk. Apple Inc. is not an exception here. As stated before, the human mind is amazing. Companies like Apple will always find a way to deal with complicated matters in legal and sharp ways.
FAQ
What is the revenue of Apple?
As of 2022, Apple has reported its revenue in the USA was 99.8 billion U.S. dollars. While global revenue reported by Apple was 365.82 billion U.S. dollars in 2022.
Who Is The CEO Of Apple?
Since August 2011, Tim Cook is the CEO of Apple.
Which is the best Tax Haven?
Cayman Island is considered the best country as Tax Haven.
Tax is a liability that almost every citizen of a country has to bear if he/she makes an income within the taxable limit. Normally, progressive taxation on many taxes such as the income tax is implemented in every country, the more you earn the more you pay in tax.
So by the above-mentioned logic, a highly successful multinational company, say Apple pays way more amounts of money in tax than an average higher middle-class citizen right? Surprisingly, the answer is surprising No, as a matter of fact, Big Companies avoid paying taxes altogether in many cases
Is it illegal for them to not pay taxes? If yes, how are they getting away with it? Why the government is not intervening? In order to find the answer to all these questions, we need the answer to a crucial one first which is what exactly is Tax Avoidance and Tax Evasion.
Although these two terms are always used as a substitute for each other there are a lot of differences between them.
Tax Avoidance is the use of various loopholes and elements in the tax code to minimize or in some cases completely avoid taxable incomes together. Some examples are using Deductions and Tax Credits as prescribed under the tax code. To sum it all up Tax Avoidance is LEGAL.
Shifting Subsidiaries to tax-free zones is a practice followed by many MNCs
Tax Evasion is the use of malpractices such as income misrepresentation, deduction inflation, and hiding of income to avoid paying taxes. Tax Evasion is ILLEGAL.
So the Large MNCs follow Tax Avoidance which is completely legal as it uses loopholes within the tax code to avoid paying taxes. Let’s take an example to better understand the various aspects of Tax Avoidance.
Tax Evasion is a bigger issue than Tax Avoidance
Example: Amazon 2018
Amazon paid exactly $0 in federal income tax for the year 2018 on an income of $11 Billion and they did it legally. As per the Tax Code in most countries, companies don’t have to pay taxes if they incur losses for that financial year, and for the first 6 years, Amazon’s business operated entirely on losses as they invested a lot of their earnings into the company growth and research & development overheads which are also nontaxable and acts as tax credits.
The income tax receipt shows that amazon made revenue of $11.2 billion yet they paid 0$ federal tax as federal taxes are based on profits and not on revenue
Furthermore, they set up subsidiaries and factories in countries where the corporate tax was much lower than in the USA (which has the highest corporate tax in the world at 21%, reduced from the previous rate of 35%). They also relocated their products to tax-free zones like Bermuda thus avoiding other taxes. After claiming more deductions, their net tax liability amounted to $0.
Reasons Behind Tax Avoidance
While the MNCs resort to loopholes in order to avoid paying high rates of taxes, the countries which act as their tax-free subsidiaries also have their own reasons.
Firstly, having a factory of a company like Apple or Amazon set up in their country is always a welcome sight as it helps in boosting their employment and growth rate and gives them exposure to the latest technological side of the market and after every successful venture more and more companies set up their factories in these countries. Bermuda is a prime example of how helpful it is to have large companies on board.
Other than being less taxable, these countries also have cheap labor and material costs so naturally, large companies gravitate towards developing nations for subsidiary purposes.
Possible Solutions
Although these tactics have a lot of advantages for both parties, there is an extreme amount of taxable income for the parent countries which gets completely nullified due to Tax Avoidance. So what possible solutions are there?
Lowering corporate tax is the first step, and although this may lead to fewer taxes in the initial stages, this opens up the door for the large companies to set up factories in the home country itself rather than shifting abroad. Let’s take an example to better understand the situation.
Suppose Company A is a small company that makes $20000 profit per year and pays a corporate tax of 20% which amounts to $4000. Another company B earns a profit of $200000 per year and in order to avoid paying high tax rates, it sets up all its factories in lesser countries and thus pays no tax at all. So the total tax is just $4000.
Now if the home country lowers its tax rate to 10%, this would encourage the large company B to set its other factories in the home country itself, so the total tax here will be (10% of 4000) + (10% of 200000) which amounts to a total of $24000, which is 6 times the previous amount despite being half the tax rate.
Another method involves the Unitary Model of Taxation whereby the taxes on charged at the place where the economic activity takes place rather than where it is reported. Many different methods of avoiding tax avoidance are being implemented but as of now, it seems like the situation will stay as it is.
Countries with the largest tax avoidance amount in the Us billion dollars
Tax rules differ from country to country with their amount and eligibility criteria also. However, it is one of the main responsibilities handed over to the citizens. Denying to pay the tax can result in criminal offenses and law charges. However, when we talk about the tax paid by multinational companies, it is astounding to notice that their tax is quite different from what we have imagined.
They take the help of possible loopholes in the tax code and minimize their tax amount. The above article includes information about how multinational companies avoid paying taxes.
FAQs
How do companies legally avoid paying taxes?
There are many ways companies can implement to avoid paying taxes or reduce their tax amount. Some of them can be opening offshore accounts, making use of loopholes in tax codes, getting paid in stocks rather than money, and many others.
What is not paying taxes called?
The term used to describe the group of people who deliberately deny paying the tax is known as “Tax Evaders”. And the term that describes the situation is called tax evasion.
What are tax-free countries?
Tax-free countries are those countries that have no rule of paying taxes or have a very little amount as their taxes. Some of the tax-free countries across the globe are Oman, Qatar, Panama, etc.
Which business is tax-free in India?
India is known for its agriculture business for a very long time. Hence, any business involving agriculture work is tax-free in India. For instance, the selling and processing of agricultural crops are tax-free.
Tyro professionals are incipient every year, so the tax is levied as much a burden or responsibility to them. However, those fledgling employees/professionals become seasoned ones, someday and may see an uplift or augment in their income in the coming years, thus this will increase the burden as well as responsibility to pay high on income tax.
As is the case, high incomes represent high tax levied on individual incomes and vice-versa. This will reflect a slow-down in the development of future plans of a person, when he/she is paying a high share of tax in the present. And, in such cases, when the taxpayer has paid a superfluous share or underpaying on the prescribed tax, is solicited to make sure to file a return.
That’s where the Government of India introduced various Tax-saving investments to progress financial stable career paths in the future.
Here are Top 7 Tax-saving investments you can invest in 2021:
As said, the future is uncertain, we don’t know what will happen the very next moment? In some cases, only the invested or saved amount of an investment lends as a helping hand in the forlorn situations in the future, despite getting a low rate of return on such investment. Similarly, business is uncertain in various factors such as market price, trends, capital value or profit etc.
Bajaj Life Insurance Capital Guarantee Solution
Bajaj Allianz has come up with its new scheme on tax-saving in 2021- the Bajaj Life insurance Capital Guarantee solution that aids individuals to earn a 100% high rate of return on the investment amount which is piqued to 16.3% in the market as of now. Besides, the schemes provide zero risks and no commission is charged on the invested amount.
Eligibility: This policy/scheme is applicable to 18-65 years.
Policy term: 20 years
Benefits: Bajaj Life insurance Capital Guarantee solution bestows zero risk as well as commissions on the invested amount. The policyholder gets the benefit of partial withdrawals.
This tax-saving plan allows the policyholder for multiple withdrawals and no tax levied under section 10 (10D). Therefore, inbuilt life covers a maximum of 12 lakhs throughout the policy term.
Bajaj Allianz Life Goal Assures
Health is wealth, as we see the reality of the ongoing pandemic really made many individuals enroll on the tax-saving scheme- Bajaj Allianz Life Goal assures. Moreover, we have loads of obligations to fulfil, from education to living under a safe roof and for all that we need a sturdy amount of money to acquire. Because of this, Bajaj Allianz Life Goal Assures provides financial support to individuals as well as his/her family throughout their lives in accomplishing their needs.
Eligibility: This policy/scheme is applicable to 18-60 years.
Policy term: 10-30 years
Benefits: Bajaj Allianz Life Goal Assures offers special loyalty additions on augmenting maturity value at the time of every 5 years of the policy term and mortality charges which have been deducted in the policy term, will be added to the return fund at the time of maturity.
The tax-saving scheme comes with zero commission as well as tolerating partial withdrawals. Apart from that, this scheme permits the policyholder for flexible transfer of different funds in order to maximise the return in various markets.
This tax-saving scheme covers the demise of the policyholder or their beloved one in the family by supporting them financially. The sum assured is expected to be 105% of total premiums which will be received either at the time of maturity/death of the holder or take the fund amount in periodic instalments under the Settlement Options(SO).
Eligibility: This policy/scheme is applicable to 18-65 years.
Policy term: 10 – 30 Years
Benefits: Canara HSBC OBC Life Insurance investment 4G benefits in providing loyalty additions and wealth booster during the policy term. Besides, this scheme offers flexible transfer of invested funds, partial withdrawals, tax exemption, Settlement Options are available to the holders in case to receive benefits on the maturity and Premium redirection is available if the policyholder wants to modify the allocation of future premium into one ULIP fund or more.
Edelweiss Tokio life Wealth secure plus
This tax scheme comes with a combo of insurance plan and investment plan, which is built to protect the wealth of an individual in the present as well as for future generations. The scheme gives 15 lakhs in 30 years if a premium of 8% per annum is paid.
Eligibility: This policy/scheme is applicable to 1-55 years.
Policy term: 10-20 years
Benefits: the fund value will be received either at the time of maturity or death of the insured, not taxable, offers three additions- Loyalty addition at the 6th year of the policy term, Wealth booster addition and Maturity addition.
Max life Online Saving plan
Every individual chooses to join a savings insurance plan so that they and their family can get financial support in times of need. If you want to protect your dear ones the Max life online saving plan is what you are looking for.
Eligibility: This policy/scheme is applicable to 18-60 years.
Policy term: 5 years to the selected policy term for maturity.
Benefits: In Max life, an online saving plan, the total premium paid till the date of death is 105%. The insured can also renounce during the policy term, the person will be funded the sum minus the charge from when they discontinued. Till the last days, the insured will receive the fund value.
HDFC Life Click2Wealth is the same as other insurance that not only supports you but also your family. They give us many alternatives in which we can choose the best that suits us. No policy loans are available. The insured person’s family has benefited accordingly if the person dies. Grace periods are also available as per the plan.
Eligibility: This policy/scheme is applicable to 18-75 years.
Policy term: 10 to 40 years
Benefits: The policy has maturity and death benefits. The fund will be growing even after the policyholder dies as per the premium waiver option. The Premium modes contain many options from which you can choose the best instalments. 1% of the annual premium is added to the fund value. They have 10 fund options. After 5 years, the policyholder can withdraw the money.
ICICI Prudential life signature
A unit-linked insurance plan that supports you to achieve your goals and protects your family. In a systematic plan, Withdrawals in Regular intervals are allowed to support your dreams. Monthly, half-yearly and annual are the three premium paying modes.
Eligibility: This policy/scheme is applicable to 18-75 years.
Policy term: 10 to 30 years
Benefits: After the mature period, the policyholder can choose to withdraw the whole amount or choose a structured payout. The insured will receive the top fund value even if the policyholder dies with a minimum death benefit. The insured is exempt from tax for the premium amount as per section 80c and section 10D.
Conclusion:
Everyone wants to see their loved ones lead a happy and wealthy life, even if they are not present to witness or share the moments with them. Life is precarious, no one can guess what tomorrow will hold for us, so start planning, it’s never too late to start. If you are in search of a path that can help you to lead a financially secure life, then we suggest you seek assistance from any of the above-mentioned insurance companies.
FAQ
How to save tax in 2021?
Life Insurance, ULIP’s, Mutual Funds, Tax Saving Fixed Deposit, SCSS or Senior Citizens Savings Scheme and Provident Fund are some of the ways you can save tax.
What is Section 80c?
Section 80C is one of the most popular section that allows taxpayers to reduce their taxable income by investing in various schemes.
Is your savings account taxed?
Yes, any interest on your savings account is taxable income.
Taxes have a very intriguing history around the globe! As we are well familiar with the fact that tax rules are essential for our country. Taxes are as certain as deaths. For the social welfare and development of any country, taxes are crucial and must be taken more promptly by its citizens. With such a serious entity of taxes, it’s quite surprising to know about those extremely unusual and weird taxes across the world. Did you know, some countries even charge taxes on prostitution? Weird, right?
To sum up such weird and unusual tax rules across the globe, we have presented this article. Such unusual tax rules pass because of the sudden financial needs in order to fill up the gaps that occurred in budgets.
Throughout the world’s history, numerous weird and unusual tax rules have been passed. Some fraction of these taxes were passed to generate additional revenue, whereas others were passed for social welfare purposes.
Well, we can not turn down the tax rules due to the chances of arrests are pretty high. That’s why willingly or unwillingly, people do follow the tax rules and pay their fraction. Let’s begin with the most unusual tax rules around the globe.
According to German laws, bribery was legal in all sectors. This continued till 2002, after which various laws were passed and bribery became illegal. But, this isn’t the unusual part. Bribes were not only legal in Germany but it was also tax-deductible, published by Businessweek editorial of 1995.
However, this wasn’t allowed when the briber or its recipient was involved in any kind of criminal offense or proceedings. On this note, bribery was restricted by the prosecution. This ended when Germany passed the public contracts of 20-30%. Germany made its proceedings of eliminating this tax deduction for bribery till 1999.
Denmark: Cow Flatulence Tax
A wide fraction of people believe the cause of greenhouse gasses is the black smoke coming from factories or the highway of Los Angeles but, Denmark holds a different perspective here! It believes the cause of greenhouse gases is cow gas.
According to research and analysis, around 18% of Europe’s greenhouse gasses come from methane, released in cow gas because of the slow digestion of greens in the cow.
To prevent the epidemic of greenhouse gas, caused by the cow fueled, several European countries passed tax charges on each cow. Thus, Denmark’s cows are worth $110.
Hungary: The Junk Food Tax
It’s quite shocking to know that some countries even charge taxes on packaged foods that are high in salt and sugar. Basically, on all junk foods. One such country is Hungary. This junk food tax is officially termed as ‘Public Health Product Tax‘, which adds up to around 20% more than the initial price.
The government of Hungary basically prioritizes the healthy diet and assesses it to the citizens of having a better product choice. This results in around 59 to 73% of consumers eliminating junk foods from their lists.
Britain: Films Tax Reduction
Great Britain charges a distinct tax deduction to films that are based on British culture. Such films need to be registered to various authorities and would be rated according to their cultural content, practitioners, hubs, and contribution.
Those films which are rated highly on the scale, get a tax reduction of 25 percent on the earnings generated by the films.
It’s very unusual for Russia to introduce a beard tax. Well, it is true! In the times of Peter the Great who was known to be the most popular Czar of Russia. And he was the one who introduced the beard tax.
Beard was the typical fare for a wide number of people in Chilly Russia. When Peter the Great visited Western Europe where he was intrigued by the barbarian culture and that’s when he decided to tax the bread. For keeping a beard, men had to give some token as in beard tax.
Canada: Cereal Toys Tax Reduction
One of the most fascinating things for a kid is to find the toy hidden in the cereal box. And Canada leaves no grounds to promote such packaging. That’s why it has provided tax breaks on cereal companies for putting a toy in the cereal box. This is unusual but at the same time, promotes kids’ welfare.
Those cereal companies that hide a toy in their cereal box around our Northern Neighbor get a reduction on the extra tax.
Ireland: Artist Tax Exemptions
For artists, managing their economic status is quite tough and often leaves them starving. But in Ireland, artists from all categories including sculptures, writers, composers, and visual artists who sell their work are not compelled to pay the income tax.
For getting such tax exemption, the artists have to file a lawsuit for their original work under the tax authorities of Ireland. They further check and provide the final statement on whether the work is original, valuable, and passes the cultural merits or not.
The history of tax rules is quite intriguing as well as unusual. And still, such unusual taxes are available in many countries across the globe. In fact, in historical times taxes were charged on cooking oils or beards. Every country has its distinct tax rules based on the country’s requirements or culture. Through this article, we did our best in covering such unusual and weird tax rules across the globe.
FAQ
Which countries are tax-free?
Bermuda, Monaco, the Bahamas, Andorra and the United Arab Emirates (UAE) are tax-free countries.
What are examples of hidden taxes?
taxes on cigarettes, alcohol, gambling, gasoline and hotel rooms are some of the examples of hidden taxes.
What are some weird taxes around the world
Cow Tax, Junk Food Tax and Tax on bribe are some of the weird taxes in history.
The Covid-19 had affected a lot of families in India and has also wiped out a lot of wealth of many individuals and left many others unemployed. In order to provide a relief to the tax payers, the Income Tax Department of the country has announced certain tax benefits and reliefs for the taxpayers. In this article let’s look at some of the important announcements.
Anurag Thakur who is the Minister of state in the finance ministry had confirmed about the tax exemptions and the development regarding it. He conveyed that the amount paid by an employer to an employee or any other person for the treatment of Covid-19 for the year 2019-20 and the subsequent years will not be taxed.
The Finance Ministry had released a report in detail about the information. As per the reports, any amount spent by anybody for the treatment of the employee or someone else would-be tax free. In simple terms, the person who has paid for the treatment and the beneficiary who has received the payment will be exempted from tax.
Tax Exemptions for Employees
The Government has announced exemptions on the tax that is received by employees from their employer or any other person for the treatment of Covid-19. The Government has stated that many employees and individuals have received help from their employers and other well-wishers to meet the expenses of their Covid treatment.
The Press release has conveyed that in order to make sure that an individual would not have any liability on the income tax payment that arises on this account, the Government has decided to provide exemptions for the employees or the individuals or the tax payer for the amount received by their employers or well wishers for the payment of the expenses caused for the medical treatment of Covid-19 in the FY 2019-20 and the subsequent years.
The Government has also conveyed that there won’t be any tax on the ex – gratia payment that is received by the family member of the deceased employee due to Covid-19. The Government has conveyed that there wouldn’t be any tax charged on the amount that an individual has received as a help from the family, friends or relatives due to Covid-19. The amount exempted from the tax would be up to INR 10 lakhs.
This is considered to be one of the most important relief and a much needed one that is bought in by the Income Tax Department. The taxpayers have faced a lot of difficulties whenever they were hospitalized or under the treatment and the medical expenses for the Covid-19 had turned to be costlier for a lot of people.
The exemption for the amount received for the medical treatment would provide some relief for the taxpayers and their families as well. It is considered that the families who have lost a member would get benefited by providing exemptions on the ex – gratia amount received by them.
Deadline extended by the Government
The Government has extended the deadline for linking PAN cards and Aadhar cards to 30 September 2021 from 30 June 2021 as many people were facing troubles in linking the PAN with Aadhar cards. The deadline for making payment under the Vivad Se Vishwas Scheme has also been extended till 31 August 2021.
The deadline for the Tax Compliance for the deadline for saving Capital Gains tax has also been extended to 30 September 2021.
The move from the Income Tax Department of the country would help a lot of families and taxpayers to come out of the financial crisis they are currently facing due to the pandemic and this would provide a relief for them.
FAQ
What is exemption in income tax?
Tax exemption is the monetary exclusion that reduces the taxable income which include exemption of charitable organizations from property taxes and income taxes, veterans.
Who are tax exempted for Covid-19 treatment?
The government stated that tax exemption will be presented to the amount received for medical treatment from the employer or the third party for treatment of Covid-19.
What is the limit to the tax exemption provided for Covid-19?
The exemption shall be limited to Rs 10 lakh in aggregate for the amount received from any other persons for Covid-19.
Nitin Konde
