End of Buy back shares?

Recently, you bought shares of a company for Rs.100. The company is ready to buy it for Rs.120. A random person in the market is ready to buy for Rs.106. Whom do you want to sell to maximize your returns?

You would be more profitable, if you sell for Rs.106 to a random person than selling for Rs.120 to the company. 

Starting with this financial year, the returns in the buy back shares are taxed in the hands of the recipient as Dividend. 

If you are selling the share to the company for Rs.120, and if you are in the highest tax bracket, then you have to pay a tax of Rs.36+Cess. 

Of course, you can claim a capital loss of Rs.100 for the purchase price, which can be offset with other capital gains that you may have. [It cannot be offset with your Salary, Savings/FD interest or any other income other than capital gains.]

Let's assume, you have a short term capital gain somewhere else and you are offsetting that loss with that. The tax benefit that you get by that is Rs.20 [20% is the short term capital gains from 2024-25 FY].

The net tax that you would be paying is Rs.36-Rs.20=Rs.16.

For the profit of Rs.20, you would be paying tax of Rs.16 [In case of short term capital gains].

Let's say, you bought this share more than a year back, and you want to offset with the long term capital gains. The tax benefit that you get from the capital loss is Rs.12.5 [Assuming, your long term capital gains is more than Rs.1.25 Lakh + purchase price of these shares].

The net tax that you would be paying is Rs.36-Rs.12.5 = Rs.23.5

For the profit of Rs.20, you would be paying tax of Rs.23.5

Hats off to Nirmal Sitharaman for bringing such a simplified tax system.

Electoral Bonds

I am a little disappointed with the judgement of the Supreme Court on the Electoral Bonds.

One of the most important aspects of a democracy is Confidentiality. One should be able to support a political party without disclosing to which party one is supporting. It has two aspects. First one is voting inside a polling booth, and second one is supporting outside the polling booth. Voting inside a polling booth is confidential and others do not have any way of knowing. But, supporting a political party outside the polling booth confidentially has many roadblocks.

Except for the businesses of politicians, no business person would like to align with any political party publicly. They always wanted to be seen as neutral to everyone. They try to tell all the political parties that they are with them. They do not want to disclose any support that they do to any political party. If they are seen as aligned to one political party, they will face many problems when that party is not in power. 

If one does not appreciate the fact that there are few people/companies that want to support the political parties secretly, they need to learn many things in democracy and politics.

Before electoral bonds, if a company wanted to donate to a political party secretly, it was a lot of work for them. They cannot write a cheque in the name of the political party, as that would be reported in the company books, and it would be disclosed. What they used to do was, they manipulate the accounts and take some money out of the company (by not so legal way), and give that cash to the political party. 

Electoral bonds was trying to fix the issue of the anonymousness. A company can buy an electoral bond through the company's money from the bank by paying money either digitally or through a cheque. The electoral bond can be physically given to any political party that the company wishes, and the political party can redeem and get the money in its bank account. 

By this, the company does not need to manipulate the accounts. Manipulating the accounts comes with a cost, as the people who supported with fake bills/accounts/companies would need some percentage of commission for their work. Also, companies won't get any tax benefits from donations to the political parties when they donate that way. With Electoral Bonds, companies would not need to manipulate the accounts and would save money from there. Also, they would get tax exemptions when they donate through Electoral Bonds. 

Even for political parties, it is not so easy to manage a lot of cash. When there is a lot of cash, it is possible that the lower level leaders would siphon some money. It would be hard for the top leaders in the political party to manage huge cash. If the money is in the bank account, then the top leaders in the political parties have control on the money.

Arun Jaitley was a treasurer of BJP for a long time. He faced all the problems, and he wanted to make it simple for both the companies and the political parties, and brought Electoral Bonds. 

Next Version of ChatGPT

Previously, people used to comment about me that, if anyone asks me one question, I ask them back 10 questions before answering their question. 

Even if I get a simple question like, "How to go to Guindy Bus stop" from anyone at Guindy Railway Station, I do not answer without asking a question to that person. 

The reason I ask questions for any question is, I would prefer to give an efficient answer or solution for their problem. A question may have multiple solutions, but, we have to pick one good solution based on the circumstances and others. If I know all the related things about that question, then I can pinpoint one accurate solution that is most suited for that situation.

I would like, if ChatGPT can do the same way. If I ask an abstract question, it assumes many things and tries to give some solution. But, it should ask questions about that problem to get the exact situation, and based on the detailed problem, it should give appropriate solution. 

[Guindy is a pretty big area in Chennai. It has three bus stops on three sides of the railway station. If anyone asks "How to go to Guindy Bus stop", one should ask their next destination from Guindy Bus Stop, and redirect to the appropriate bus stop out of the three. If anyone points them to a random bus stop, and if that is not the correct bus stop, one may have to walk half a kilometer to the other bus stop. There were a few times when I got irritated with others, when they interrupted my questions, and gave a random answer to the people.]

[Nowadays, people are not commenting me much, may be due to either Respect or Fear or both. But, my attitude of asking questions did not change.]

Giving Money for voting NOTA

If I have power, I would change the elections where voters would get money, if they choose NOTA. 

In the new system, we will remove the NOTA option from the main polling ballot box, and put a separate exclusive small box for it, with only a button (So that, it is easily distinguishable). When anyone presses that button, it would be considered as voting for NOTA, and a printed paper with a QR code would come. The voter can take that paper (preferably without others noticing, and hide it in pocket or somewhere). 

After two days, they can use one of their UPI apps like Paytm, Google Pay, Phone Pe etc., and scan that QR code. Once they scan, they would get some money in their bank account linked with the corresponding UPI. The QR code would expire after a month after the election results are announced, and they have to scan it before that to get the money.

How does it work behind the scenes?

Once the election notification is issued, the Election commission would invite donations to distribute to the people who have voted for NOTA. The donations can be at the level of Country, State, Parliamentary/Assembly constituency or even at the polling booth level. The money that anyone donates for a particular level is distributed among all the voters of NOTA at that level. The donations are accepted till 2 days before the election, and the donation details at all levels (along with the total number of voters at that level) are published a day before the election. 

Let's say, I donated Rs.1 lakh to a polling booth in one particular assembly constituency that has 1000 voters. In that polling booth, if 100 people vote for NOTA, then this Rs.1 lakh would be distributed among all the 100 people, and everyone would get Rs.1000 each from the money that I donated. 

Along with that, if someone else had donated Rs.1 crore in that assembly constituency of 2 Lakh voters, and if there were 20,000 NOTA votes, then each voter in that assembly constituency would get Rs.500. 

The voters in the above polling booth would get Rs.1000 at the polling booth level and Rs.500 at the assembly constituency level, and in total they would get Rs.1500.

Once the election is completed, and the presiding officer signs off saying that there were no issues in the polling and it does not need any re-poll, the NOTA box would be separated, and the corresponding QR codes would be activated. Once the QR codes are activated, anyone who got the QR code slip can scan from any UPI app and get the money.

Reason for giving money to NOTA voters

Many people do not know the value of the vote. If they have to choose between voting for a particular person or Rs.500, many of them would choose money. In an ideal democracy, the person who wins in the election should be liked by the majority of the people who care for the democracy. The people who do not care about the democracy should be neutral. In the present system, people who do not care about the democracy are voting for random people, and the elected people are not the representatives of the people who care for the democracy. 

Anonymous voting

As long as the voter takes the QR code slip without others noticing, the anonymousness is not lost. Once the QR code is activated, that can be scanned from any UPI app of any person, and it does not need to be from the account of that particular voter. 

Announcement of NOTA votes before the election results

The count of NOTA votes are announced 2 days after the polling and there is no harm in that. If people get the money immediately, then it would give some idea to the voters about NOTA in the next phase of that election. 

Funding for the distribution

In the elections where the political parties are already spending a lot of money, there won't be any issue in the funding. Political parties want people to vote for them. Along with that, many parties try to stop people from voting for the other parties, and they try to do many things like splitting their vote bank by bringing another candidate who is from the same background (like their party's rebel candidate, or if there is caste feeling, then same caste person etc.). 

With this, they do not need to spend a lot of effort on those things. If the political party feels that voters in a particular polling booth would vote for their main opposition party, then they can donate a lot of money to that particular booth, and people in that booth would choose NOTA, by depriving the votes for the other party. 

Of course, the same thing would be done by the opposition party in the polling booths where they have more support. 

Trends of the Money

In this approach, the money that people would get is going to be significant. In selected polling booths of Pulivendula, Kuppam, Mangalagiri and Bhimavaram constituencies (Constituencies where Y.S.Jagan Mohan Reddy, Nara Chandra babu Naidu, Nara Lokesh and Pawan Kalyan contested), the money may even cross Rs.10,000 per NOTA vote. 

But, after an election or two, the money may come down drastically, if people do not change. If people prefer Rs.500 higher than voting for a candidate, then political parties may just give enough funding for them to select for NOTA, and there is no need for them to give a lot of money for NOTA.

[Unless people become too intelligent, where they threaten the main political parties to give higher amount for NOTA, or otherwise, they would vote for the independents.]

Future of the elections - Taking the ideology to the public

Once the people who do not care about democracy are going to be neutral, the next thing that any political party has to do is, taking their party's ideology to the public. They have to convince people that their ideology is the best, and that is more valuable than Rs.10,000. 

The politics have to be done like many religious institutions, where their only goal is taking their ideology to the people. If one looks at any serious follower of any major religious institution (including ISKCON, Art of Living, Isha Foundation etc.), if they are given an option of choosing money vs their organization, they would choose their organization. 

Politics also would change that way, where each political party's goal is taking their ideology to the public and convincing them about that (and in the words of non-supporters, it is brainwashing). 

And, that is the ideal democracy.

Meesala Saibaba, Loksatta Party

 

Meesala Saibaba garu is a low profile leader who contested in 6 elections for Corporator, MLA, MLC and MP from Loksatta party and as an Independent. He worked for Loksatta party initially, and after Loksatta Party stopped contesting in the elections, he contested in the elections as an Independent by taking Loksatta Party symbol (Whistle).

When I met him first time, I never thought that he would go on contesting in that many elections. 

He always used to say that, he does small small things. He never did any big things like other leaders. Because of that, I never expected him to contest in any election. But, he showed how does one achieve bigger goals by taking baby steps. 

Sadly, he left us too early.