What are the three things you wish for from the Budget?
Total exemption of dividend income from tax is highly iniquitous and distortionary. Hence, it should be reduced to a figure of, say, Rs1 lakh to retain the interest of medium-income groups in the capital market.
Only minimum changes should be made to the Income-tax Act in view of the fact that a new Act is to come soon.
Section 56(1)(v) should be amended to apply to gifts in kind also so that gifts received by politicians such as Mayawati are subject to tax. A higher rate of tax should be prescribed for such gifts.
If you could end one thing, what would it be?
Total exemption of dividend income should be removed.
If you were finance minister, what would be the one thing outside your industry you would want in the Budget?
Removal of all surcharges and cesses, as these create aberrations in income-tax law.
The one thing you don’t want changed?
Tax benefits to women and senior citizens.
Which budget disappointed you most? Why?
The budget for the year 2005-06 when the benefit given by section 88B for senior citizens was withdrawn because it hurt elderly people without there being a well-organized social security scheme. Section 88B conferred maximum tax benefit of Rs20,000 to a senior citizen. This got reduced to Rs12,000 for assessment year 2006-07 and Rs14,000 for the next year because of raising of higher exemption limits for senior citizens.
One proposal you think is shot down in every budget, but should not be.
Making minimum amendments to the Income-tax Act through the Finance Acts.
What would you consider to be inclusive growth?
The concept of inclusive growth has become a myth. The suicides by farmers and other problems of rural areas remaining unresolved clearly show this. But in the context of income tax, higher collections to be used for people below the poverty line is the need of the day. This can be achieved by increasing the tax base and catching evaders and not by reducing tax rates.
T.N. Pandey is a former chairman of the Central Board of Direct Taxes.