TAXMAN COMETH
The former Secretary in the Ministry of Finance who donned the role of chief of Finance commission Mr.Vijay Kelkar had opined that Government loses much of its tax revenues through a plethora of exemptions extended to various groups of tax payers. Some of them are profits out of export income was exempted. This was offered as an incentive to Industry when our Forex reserves were absymally poor. Most of our Software titans do not pay taxes on profits because they derive revenues through exports. Even Narayanamurthi has lamented about this anamoly. there are concessions to those who set up Industries in backward areas, invest in Free Trade Zones ( Special Economic Zones). Even exemptions on saving schemes such as contribution to Provident Funds, Premia to LIC polices were also resented. Exempt, Exempt tax regime was proposed to do away with such concessions. It was in fact such measures promoted public savings which were used for development activities of the Government. Now the much awaited Direct Tax code to replace the existing Income Tax Act and rules mae thereunder have been published in Ministry;s website for comments This seeks to do away with the exemptions including those intended for promotion of public savings. Now your withdrawals from accumulated PF funds will be taxed and your maturity payments on Life policies will be taxable. I am yet to go through the voluminious Direct tax code but wonder what if a citizen has contributed to these schemes as a measure of savings for the future. Applying this retrospectively will hurt his interests. Again what if he has had no taxable income with or without savings schemes? What if in the year of withdrawl he has no other income other than the withdrawl? Will this not disincentivise those who opt to contribute through their savings for a national cause? I agree some of the archaic exemptions need to be thrown out. But to hit the common man with such EET regime will be unjust
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