Monday, June 30, 2014


A new Government is in place and the aspirations for a policy statement through the Union Budget is soaring. Twitter and Facebook posts are also be used liberally to voice one's expectations while yours truly resorts to recording the expectations in this post.

The economy is creaking and the Iraqi crisis has not helped matters. However, Indians rise to their very best in times of crises, be it the Bangladesh influx or the sanctions imposed and more relevantly the mortgaging of gold and renting the airspace to US for its Gulf operations to fix the boat. This time could be no better. The pill for the economy is to ensure that the demand surges, supplies meet the demands, costs are cut to tame inflation while the revenue of the Government to meet its expenditure within the parameters of the deficit permissible is a recipe for innovation while the doomsdayers would cry from the sidelines that disaster awaits the nation. In this backdrop a wishlist is placed hereunder for consideration

The concept of deductions favour the rich as against a rebate. Take the example of a deduction of Rs 1 lakh u/s 80C of IT Act. The rich gets a relief of Rs 30,000 and it goes down to Rs 10,000/. Essentially, conversion of this into a rebate would mean that the rich are discouraged from saving and the incentive for investments could be placed at a higher rate resulting in the lower income groups also moving towards investment. Thus rebates being classified as savings with 10% rebate and investment with 30% rebate would provide the right impetus to the investment climate. Expenses in the nature of donations could be placed at 20% rebate thus ensuring progressive taxation.

The salaried classes constitute a huge taxpayer base while accounting for a marginal amount of taxes. The administration of the taxes are normally vexatious for this class. A standard deduction of Rs 50,000 would alleviate their hardship to a large extent. Similarly, in cases wherein the salary is realised by way of litigation, there is a need for allowing the litigation expenses as a deduction. The provision for a tax exemption under the head salary upto Rs 3.60 lakhs  would also ensure that employers and employees do not collude to pass them as business income.

Many professionals are subjected to TDS but are credited with substantial amounts at the end of the year which results in they having to pay interest forcibly. An option for higher deduction of tax would enable these persons to save on the interest component while the exchequer would get the benefit of fund inflow in the month of April when inflows are lower.

The above measures would on one hand release substantial amounts into the market as disposable income. In order to ensure consumption is channelised towards domestic goods, it would be necessary to infuse indirect tax reforms. An excise duty cut whereby only the top 25 contributors to excise duty are levied excise would render the other goods cheaper in the market. These goods would also be able to promote quality and enhance production if the relief is tagged to the enhanced quality. The spin off of such a measure would be consolidation of such industrial units leading to competition in the international market too.

The compliant are punished and the defaulter is rewarded has been the resultant feeling of a number of schemes. In order to track defaulters of TDS and TCS, the IT Dept should make available an option on its portal for the deductee to mention the amount of TDS deducted which does not figure in his statement even after one month of the due date for filing the statement. A matching exercise could be carried out and the defaulter tracked in the shortest possible time. This would ensure that voluntary compliance is not penalised while the defaulter is tracked within time. The deductee would also not be penalised for no fault of his and the Dept would also save on grievances.

The need to boost the second and third tier cities is felt. The creation of corridors linking every district to the State capital by road and rail is to be ensured. Similarly, the need to set up infrastructure hubs which would trigger developmental processes in these towns needs to be envisaged. To cater to this need, the Infrastructure bonds may be thrown open without a ceiling to persons who have stashed money abroad. They could be asked to forego 70% of the sum as taxes and the balance 30% would go into these bonds carrying a taxable interest of 4% to meet the ends of equity as they had contributed to the current situation. Corporates with turnover exceeding 50 crores may be asked to contribute to the fund which would qualify for a 20% rebate in taxes. Besides this the artificial ceiling on investment in these bonds could be removed to enable investors to invest in these funds.

Education is a key area which needs focus. The cess collected from each State/ UT needs to be earmarked for development of education centres within such State/ UT. This would provide the impetus for the local authorities to also promote compliance in Central revenues. The identification of teachers and providing them the best of facilities is the need of the hour. 5% of the outlay needs to be for education. Similarly, the energy sector needs to be holistically reviewed. Plans to tap renewable energy should be extended to tidal and rainfall energy. Installation of solar panels on railway and bus tops to cater to the electrical needs within could result in saving of fuel.

The fuel costs need to be rationalised and made uniform. The first step in the direction would be to impose excise / customs duty on slab rate basis rather than percentage. This would make the hikes more palatable. 

More in the next one as a debate emerges on these points. Expecting a storm in the teacup!

Wednesday, June 25, 2014


The day for Board exam results had dawned. However, the palpable excitement was largely on account of the water gushing from the taps instead of its routine trickle. The newspaper took a backseat as the water filling exercise gave way to water utilisation activities such as gardening, washing etc taking the driver's seat to optimise the unusual bounty. Ensuring that the household was sumptuous with its water containers brimming, the reassured yours truly marched ahead for the daily grind.

Boarding the public transport with aplomb and wading the way through the human mass, a suitable place to stand was in the making as the kind denizen occupying an aisle seat vacated as though on cue. The heavy mass that constitutes yours truly landed on the seat with the elegance of a feather. Soon the young man seated beside punched out numbers on his cell phone to start intimating a couple of his buddies of the results. It was only at this point of time that the fact that the news had taken a back seat made an enlightening presence. The young man had apparently done well within scores of over 80 in Economics and Accountancy. But he was repeatedly ending the conversation seeking the roll number of one of his mates. 

A couple of them congratulated on their scores but the eagerness was reserved for the particular mate who had evidently refused to share the prized possession of his roll number. It is for nothing that the proverb " Persistence Pays " has been coined and soon the number was found and dutifully scribbled on to the left palm of this neighbour who occasionally grinned at me. Yielding to the enthusiasm of this chirpy youngster, I ventured to congratulate him for which he nodded. Surfing the net on his cellphone, he exclaimed, " the bugger has made it!" 

He then jotted down figures which were mostly in the thirties and one barely crossing the forty mark. He showed it to me with a sense of triumph and said, "You know he has made it!". Even as I was trying to fathom what this man was upto another conversation was struck on the cell phone, " Manju, Congrats!  Really, Mother promise, I have seen it myself , you have made it! Let me tell your scores." Then after a pause, he said, " I am travelling in a bus. The person next to me is a stranger. He will tell you whether I am lying." Even as the sentence ended the cell phone was thrust in my hands and yours truly was called upon to recite the marks from the left palm. The sincerity of the man's friendship and his beseeching looks were too much for one to ignore. Discharging the duty cast and meekly congratulating the unknown recipient with discomfiture and offering my best wishes the gadget was returned to its owner.

Couple of minutes later, the bearings were regained and with an effort of composure yours truly saluted the true friendship of the young men. The eighties scored by him or the congratulations showered on him paled in comparison to the priceless clearing of the exams without the loss of an academic year by his dear friend. May this tribe grow! May also the tribe which promotes success in others grow!! May also the success of both the giver and the recipient grow manifold!!!