Does the President of India pay taxes?
Current Affairs
In his recent 4-day tour to his hometown in Kanpur, UP, President Ram Nath Kovind encouraged people to pay taxes, by citing his own example, saying he pays more than 50% of his salary in taxes. This statement went viral on Twitter, with people questioning the President’s tax structure and his awareness of the same.
Today we fact-check his claims.
What exactly did he say?
“The President is the highest-paid employee of the country, and he also pays taxes. But someone will say that you get five lakh rupees... everyone talks about that. Out of that, every month, a quarter to three lakh comes out. So, how much is left? Our officers and others get more than what is left. The teachers who are sitting, they all get more.” - President Ram Nath Kovind
How much does the President earn?
The President, as he stated himself, is the highest paying officer in the country. In Feb 2018, then FM Arun Jaitley announced emoluments increment of the President, Vice President, and State Governors to Rs 5 lakh, Rs 4 lakh, and Rs 3.5 lakh respectively.
How much does he pay in taxes?
The President, Vice President, and other constitutional functionaries have to pay taxes on their income.
No one (yes, no one) is exempt from paying income taxes. Everyone is required to file an income tax return (ITR) even if they fall under the tax slab of 5 Lakh. Moreover, nowhere in the act does it clearly state that the President is exempted from paying taxes.
Tax calculator - Presidential edition
The tax regime for the President and Vice President isn't exactly clearly stated, so we took a shot at calculating what the President probably meant, and how it would be possibly structured.
Even though it isn't exactly how the President stated, this is a close approximation of what he meant to convey.
[Author’s opinion] However...
Although it is beneficial for the First Citizen of the country to encourage people to pay taxes, he should not be highlighting that school teachers save more money than him.
To point out:
The Rashtrapati Bhavan, the President's official residence, is the largest Presidential palace in the world.
The official state car of the President is a custom-built heavily armoured Mercedes Benz S600 (W221) Pullman Guard.
Air India One is the call sign of any aircraft carrying the President. The aircraft are operated as VIP flights by the Indian Air Force.
Certainly, there are more ways to encourage people to pay taxes! What do you think?
Pakistan’s grey list problem: The FATF saga
Global Politics
What happened?
On June 25, 2021, the Financial Action Task Force (FATF), a Paris-based UN watchdog, refused to take Pakistan out of its ‘Grey List’ despite the country’s confidence of being let off the grey list during this session.
Pakistan's continuation on the list means that it will not get any respite in trying to access finances in the form of investments and aid from international bodies including International Monetary Fund (IMF).
What is the FATF?
The Financial Action Task Force (FATF) is an intergovernmental organisation that sets international standards to combat money laundering and terrorist financing. It was established in July 1989 by the Group of Seven (G-7) countries.
It works closely with the UN Security Council on listings of terror groups and it evaluates countries on their efforts in anti-money laundering/countering the financing of terrorism.
Since 2000, FATF has maintained the FATF blacklist and the FATF grey list which list the countries with major concerns.
The blacklist
The FATF blacklist lists countries which are judged to be non-cooperative in the fight against terrorism and money laundering. These are called "Non-Cooperative Countries or Territories" (NCCTs). As of February 21, 2020, only two countries were on the FATF blacklist: North Korea and Iran.
The grey list
Countries make it to the 'grey list' when it is deemed that their financial structures can be exploited for prohibited dealings. FATF believes that these countries should be under increased monitoring even as they engage with FATF to address strategic deficiencies in their regimes to counter money laundering in an agreed time frame.
Some notable countries on the Grey List this year are Myanmar, Mauritius, Cambodia, Panama, Barbados, Cayman Islands and Syria.
Why is Pakistan on the list?
Pakistan was first put on the list from 2012 to 2015 for terror financing but was removed when it showed significant progress by establishing a legal and regulatory framework.
However, it was put back on the list in 2018 for “strategic counter-terrorist financing-related deficiencies" and given a list of 27 action points to comply with in order to be removed from the list.
The 2021 verdict
In its latest plenary session held from June 21-25, the FATF said that despite completing 26 of the 27 tasks, Pakistan’s failure to complete the last task of convicting terrorists and terror entities meant that it would not be delisted for now. It also asked Islamabad to investigate and prosecute senior leaders of UN-designated terror groups, including Hafiz Saeed (wanted for 26/11 Mumbai terror attacks) and Masood Azhar (Jaish-e-Mohammed chief).
FATF has also handed down another 6-point list of tasks on money laundering as actions to be completed.
Pakistan’s response
Foreign Minister Shah Mahmood Qureshi on Saturday said there was 'no room' to keep Pakistan on the FATF's 'grey list' since it has implemented 26 out of the 27 points. Qureshi also said that 'some powers' desire to keep Pakistan in the FATF's 'grey list' and it needs to be determined whether the global forum is acting as the intended watchdog or being used for political purposes.
What does this mean for Pakistan?
Unlike the“blacklist”, greylisting carries no legal sanctions, but it restricts a country’s access to international loans and makes the flow of overseas investments difficult.
Qureshi had estimated a loss of USD 10 billion annually to the Pakistani economy for every year that Pakistan has been on the grey list.
Islamabad-based think tank Tabadlab has revealed that Pakistan sustained a total of USD 38 billion in economic losses due to the FATF's decision to place the country on its grey list, thrice since 2008.
India’s stand
For India, Pakistan’s continuance on the list is some comfort, even as it awaits true justice to be delivered to leaders of groups such as the LeT and JeM for attacks like Mumbai 26/11, Parliament (2001), Pathankot and Pulwama.
India also questioned Pakistan’s rushed decision to register cases against Azhar, Mir and Rauf Asgar, part of the top leadership of JeM just before the FATF meet in February 2021. India called these arrests “farcical actions” that Pakistan takes before important meetings.
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