Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: VAT RATES :: empanelment :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: form 3cd :: VAT Audit :: due date for vat payment :: list of goods taxed at 4% :: ACCOUNTING STANDARDS
 
 
Direct Tax »
 GST Council relaxes return filing rules for July-Aug
 Here's how self-employed individual can file tax return with ITR4
 CBDT mulling new system of jurisdiction-free I-T assessment to curb corruption
 CBDT draft notice on computing tax liability of foreign firms
 CBDT forms task force for jurisdiction-free income tax assessment system
 Aadhaar must for filing returns from July 1: CBDT
 Aadhaar mandatory for filing I-T returns and obtaining new PAN card from July 1: CBDT
 Central Board of Direct Taxes cuts profit margin for safe harbour rules
 What is TDS and how does it work?
 Income tax return: Do super senior citizens have to file returns?
 Investors cheer retailers facing lower tax rates

Don't derail tax reforms
March, 17th 2010

The proposed direct tax code is the right step towards rationalisation of taxes and savings schemes. To tamper with it at this stage is to blunt its objective. The issue in question is whether savings schemes like provident fund should be taxed. The answer is yes. The present exempt-exempt-exempt (EEE) mode is irrational.

This allows an investor to seek exemption when he invests, reinvests and when he closes the scheme. International practice is to tax the investment at some point. The preferred norm is EET (exempt-exempt-tax), whereby the investment is usually taxed on maturity.

The new pension scheme follows this norm. But there are few takers for the NPS since many pension plans and savings schemes that follow the EEE model continue to exist. The latter must go in the interest of rationalising norms for similar schemes. The rationalisation must follow international practices.

The principle behind taxation is to tax income if it falls in the tax bracket. Whether the income is retirement savings or proceeds from sale of property doesn't matter.

In India, the investor is allowed to seek tax exemption on the principal when the investment is made within a certain limit. He can't insist that such investment must not be taxed at any point, including when the money is withdrawn for reinvestment or consumption.

The argument that the Indian experience is unique because the state here doesn't provide social security is also flawed. Indian state does provide for services like a public distribution system for food grains, public schooling and hospitals.

Yes, the quality of these services is nothing to crow about. They must be improved. Funds needed for this purpose have to be raised by rationalising the tax system. Our system is far too complicated with its web of exemptions. The direct tax code is a step towards rationalising it.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Sitemap

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions