Skip to main content

Overhaul of indirect tax laws

BloomBerg

India is preparing an overhaul of its direct tax laws to replace a byzantine matrix of rules and help Prime Minister Narendra Modi reduce income inequality if he returns to power next year, according to people with knowledge of the matter.

At the heart of the rework is potential increases in capital gains taxes for top income earners, the people said, asking not to be identified as the details are private. For instance, while India levies a tax of as much as 30% on income, it taxes gains on certain asset classes such as equity funds and stocks at a lower rate. 

This isn’t progressive and goes against the principle of equity, said one of the people. A panel may be appointed to build on proposals submitted to the Finance Ministry in 2019 with an eye to implement in 2024, though no final decisions have been made, the people added.

A Finance Ministry spokesman didn’t immediately respond to an email seeking comments. The benchmark stock index fell as much as 0.6% in Mumbai after the report.

“Our income tax rules, particularly capital gains provisions, have become a patchwork over the decades,” said Rahul Garg, partner at Price Waterhouse & Co LLP. While there is a need to make them easier and equitable, implementing a system which is a win-win for all won’t be easy.

♦️Tax policy should not be tampered until about 25% of India’s population is invested in equity, said Deven Choksey, managing director of KR Choksey Shares & Securities. One estimate suggests only 3% of India’s population invests in stock markets at present. 

India’s reliance on indirect taxes — levies on consumption — rather than direct taxes on capital is often cited by economists as the main culprit behind the country’s poor getting left behind even as the nation minted 70 new millionaires each day between 2018 and 2022. Oxfam International estimates the top 10% of India’s population holds 77% of national wealth and government data show about 6% pay income tax.

Archaic Law
Leaders around the world are trying to narrow income gaps, from China President Xi Jinping’s “common prosperity” program to US President Joe Biden’s proposal of higher taxes for the wealthiest. Modi, who came to power with the strongest mandate in three decades on a platform pledging dignity for the poor, has often been accused of policies that favor the rich
〰️〰️〰️〰️〰️〰️〰️〰️

https://www.reuters.com/world/india/india-eyes-higher-capital-gains-tax-rich-bid-curb-inequality-bloomberg-news-2023-04-18/


April 18 (Reuters) - India's income tax department on Tuesday denied that there was a proposal to increase capital gains tax for top earners after Bloomberg News reported the country was reworking its direct tax laws.

The report said increase in capital gains tax was at the heart of the rework that was aimed at helping reduce widening income inequality.

♦️ The income tax department later tweeted that there was *"no such proposal before the government on capital gains tax"*

Comments

Post a Comment

Popular posts from this blog

Helen Mirren once said: Before you argue with someone, ask yourself.......

Helen Mirren once said: Before you argue with someone, ask yourself, is that person even mentally mature enough to grasp the concept of a different perspective. Because if not, there's absolutely no point. Not every argument is worth your energy. Sometimes, no matter how clearly you express yourself, the other person isn’t listening to understand—they’re listening to react. They’re stuck in their own perspective, unwilling to consider another viewpoint, and engaging with them only drains you. There’s a difference between a healthy discussion and a pointless debate. A conversation with someone who is open-minded, who values growth and understanding, can be enlightening—even if you don’t agree. But trying to reason with someone who refuses to see beyond their own beliefs? That’s like talking to a wall. No matter how much logic or truth you present, they will twist, deflect, or dismiss your words, not because you’re wrong, but because they’re unwilling to see another side. Maturity is...
Post a Comment
Read more

The battle against caste: Phule and Periyar's indomitable legacy

In the annals of India's social reform, two luminaries stand preeminent: Jotirao Phule and E.V. Ramasamy, colloquially known as Periyar. Their endeavours, ensconced in the 19th and 20th centuries, continue to sculpt the contemporary struggle against the entrenched caste system. Phule's educational renaissance Phule, born in 1827, was an intellectual vanguard who perceived education as the ultimate equaliser. He inaugurated the inaugural school for girls from lower castes in Pune, subverting the Brahminical hegemony that had long monopolized erudition. His Satyashodhak Samaj endeavoured to obliterate caste hierarchies through radical social reform. His magnum opus, "Gulamgiri" (Slavery), delineated poignant parallels between India's caste system and the subjugation of African-Americans, igniting a discourse on caste as an apparatus of servitude. Periyar's rationalist odyssey Periyar, born in 1879, assumed the mantle of social reform through the Dravidian moveme...
Post a Comment
Read more

AI & Higher Education: The Empty Classroom

  ARTIFICIAL INTELLIGENCE & HIGHER EDUCATION The Empty Classroom When students outsource learning to AI and companies cut the engineers who know better, both ends of the talent pipeline fray at once. India is not watching from a safe distance. Chuppala Nagesh Bhushan At the University of California, Berkeley, something unremarkable happened in spring 2026: a professor held office hours. The unremarkable part was that nobody came. Dan Garcia, who teaches CS 10, a broad introductory computing course popularly called “The Beauty and Joy of Computing,” found his calendar conspicuously clear at the very moment his gradebook became conspicuously alarming. Of the students who sat CS 10’s final examination, 35.3% received an F—five times the historical norm of roughly 7%. Two other courses in Berkeley’s elite Electrical Engineering and Computer Sciences department suffered similarly: 10.6% of CS 61A students failed, and 16.8% of those in EECS 127, an upper-division optimi...
1 comment
Read more