Article in taxindiaonline on new Direct Tax Code

New Direct Taxes Code: Comforting the comfortable! - Is it Income Tax's H1N1?

SEPTEMBER 02, 2009

By Subhashree Kishore

(H1N1 is a variant of the 1919 Spanish Influenza,and the present Direct Tax Code is a variant of the Income Tax Act of 1961. Both are curable but fatal if left untreated.)

The New Direct Tax Code has been hailed and hollered as per individual tastes. It claims to make the process simpler and intoxicate assessees into compliance.

Well, it begins earnestly enough by merging the assessment year and financial year concepts and removing the resident not ordinarily resident proviso. It seeks to tax��on-profit (a much maligned term) organizations at 15%. It is sincere in promotion of economic activities and fuelling investment and growth by bringing down rate of corporate tax, doing away with STT and indefinite carry forward of losses. It is true to industry by relaxing the individual tax slabs so that people have more purchasing power.

Amongst the bright lights and concentrated intellectual exercise of over three years to sweeten taxes, unfortunately at the end of the day, as usual, the individual tax payer has got a raw deal.

Typos

The simplest ‘technical’ error in the carefully drafted code is ‘turst’ an unexplained word which appears in Part D, Clause 101 (3). It may however be overlooked considering that this section could hardly touch salaried classes as the threshold limit for wealth tax has been generously hiked to Rs. 50 Crores.

Renting ideas from Uncle Sam

The bursting of the realty bubble in the US led to a global depression-like (depression is after all a bad word) situation and hence every attempt has been made to deglamourize this sector.
Once the draft code becomes law, an assessee can no longer claim deduction in respect of housing loan interest, should he choose to live in the house that he built. Repayment of housing loan also does not qualify for deduction under the investment bracket. So he should choose to live as a tenant rather than go through the arduous process of building a house, committing himself to EMIs and still end up paying more tax.

Of course, the tax slabs will be enhanced and income upto Rs 10 lakhs attracts only 10% as per the new Code. But factor in the taxable perquisites, denial of exemption in respect of HRA, medical reimbursement and EET regime - his gains are negligible. Again the Code is not clear on treatment of capital gains on sale of residential property. One can only claim residual exemption by investing in the Capital Gains Deposit Scheme.

Firing at elderly with 'Cannon' of Equity

In pursuit of “all being equal before law”, everyone has been placed at equal disadvantage. Retirement benefits have been skillfully deprived of any benefit in the new Code. All new payments into various Provident funds will be taxable on withdrawal. The only relief is if the same is used as a rollover - to buy annuity or invest in the same account or other account with the permitted intermediaries namely

(a) approved provident fund;
(b) approved superannuation fund;
(c) life insurer; and
(d) New Pension System Trust;

All other instruments like the NSCs, bank fixed deposits and equity-linked schemes have been closed out. So everyone, be from public or private sector, who plans for his life after superannuation has few options but to trust the New Pension Scheme or buy whole life policies which are exempt from tax on receipt of money at the end of contract period. In effect, though retirees may enjoy higher threshold limit, they can hardly bank on the money saved in working life to see them though the autumn.

The only way to enjoy your money seems to be to keep it as far from you as possible!

Children with new toys

Exempt-exempt-taxable (EET) was the long-time slogan of the finance ministers. It does have a stylish ring about it. It has no intrinsic merit so as take the pride of place in income tax law.
Withdrawal fails to satisfy the definition of income. The money has been saved from tax-paid or taxable income. It is not an additional income. One may agree with taxing appreciation in value or interest. But principal is not income. It would be better to classify the aggregated savings and withdrawals under wealth. Then most assesses would benefit under the Rs.50 crore umbrella.
Let us be clear. Either something is exempt or taxable. We need not bring in temporal dimension and postpone the pain.

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Article in The Pioneer - 28th Feb 2008

24x7 news on the idiot box
Second Opinion: Subhashree Kishore
With the flourishing of a plethora of television channels devoted to particular interests, one might be prompted to say that now television viewers in the country are spoilt for choice. They are no more dependent on a single state-owned channel as was the case more than a decade ago. But a closer look at the programmes shown on these channels tells a different story.
Almost all news channels are TRP-driven. They seek to get maximum public attention by whipping up mass hysteria and offer people what is easy and sensational and not what is desirable. This commercialisation has reached a new high as seen in the recent IPL player auction. The electronic media seems totally out of sync with the real India and its problems like food crisis, pollution, malnutrition, diseases, etc, except when forced to fill footage with stories of human grief or natural disasters. Aiming to give the stories a human face, the media makes hapless victims undergo televised trials with pointed, intrusive questions and insensitive language.
Of course, there are a handful of news channels that have debates and discussions. But sandwiched between promos of the latest films and never-ending interviews with celebrities, their kin and sycophants, they dilute the focus.
Despite its other failings, Doordarshan did its bit and still does so with programmes for farmers, coaching for school students, anti-drug addiction drives, content for family audience and children-specific programmes. Today children are made showpieces, conscripted to behave like adults with emotion-fraught mothers and relatives fighting on shows, termed as talent hunt. Quiz programmes have become a rarity. Games of chance, reality shows and film-based song-and-dance shows have become commonplace.
The saas-bahu sagas are retold with killing monotony. The jewellery, the make-up, the vamps and scheming ladies do not change. Programmes of the genre of Great Expectations, Surabhi and the like are always welcome. Sadly, nobody has the courage to ignore formulas.
Classical arts have become an anathema to most channels. Surely, if a director can effectively market a highly regressive image of the Bharatiya naari far removed from reality, he must also be able to popularise art, some real unsung heroes in society or, just for a change, happiness and triumph instead of tears and mean minds.

Budget fever - New article

EVEN as Delhi shivers in cold wave, the North Block is probably warming on a teeming, beaming cup of joy, for tax collections are up by 40% and direct taxes at that. So have Indians become more prosperous, honest and law-abiding? Perhaps yes. There is also optimism among tax-payers that the FM will keep his promise of simplification of tax laws and easing of tax burden now that compliance has improved. Of course, corporates, their organized associations and professionals are probably ready with their wish list - respectably labeled ‘suggestions’. Despite the sporadic enhancement of threshold limits and progress towards a three-tier system on par with world economies there is still much to be done to make personal income tax sufficiently ‘personal’ rather than apathetic as it is viewed to be now. This write-up proceeds to propose a few changes aimed at easing the squeeze of individual assessees, more particularly the salaried class. For more...............

Check out the article with this link for Budget suggestions on Personal Income Tax front.
http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6718
If you have problem in accessing the webpage, please check "Budget Run-up" [Inside "More Articles"] in the website
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