Level the tax field
1 min read 27 Mar 2023, 11:06 PM ISTCommendable taxation shifts under Nirmala Sitharaman as India’s finance minister include an effort to ease the burden on individuals who don’t use the services of tax advisers
PremiumCommendable taxation shifts under Nirmala Sitharaman as India’s finance minister include an effort to ease the burden on individuals who don’t use the services of tax advisers. An exemption-free option of lighter income tax is consistent with the canon of simplicity. A withdrawal of sops designed to encourage risk borne on retail investments would also serve that end, levelling the field for those who prefer to keep their savings simple—in bank deposits, for example. Yet, while this idea may have popular appeal, its uneven application exposes it to criticism. Budget tweaks sprung upon us on Friday applied the principle to debt but not equity mutual funds. The government took away its tax nudge towards the former in a surprise move that’s expected to boost deposits, though at the cost of our market for corporate bonds (which will now attract less money). As directly earned stock dividends are taxed at marginal rates as per one’s income slab, it’s unclear why equity funds shouldn’t also have lost similar tax privileges. If the broad goal was to reduce the impact of sophisticated advice on the tax bills of people, the Centre should’ve covered the entire gamut of investments.
