Income tax concessions : implications for equity and growth of tax base
Abstract
V N KOTHARI (EPW,i February 21) argues
that the income tax base in India is being
eroded in the name of tax concessions as
incentives for savings. On the basis of a
broad analysis of the income tax/GDP ratio
and some limited hypothetical arguments,
he reaches a very serious conclusion that "by
extending exemptions to the principal
amount invested in particular forms such as
the NSC, we have resorted to a costly and
inequitous method of borrowing. A full or
partial exemption of interest income would
have been enough". Considering the profound
implications of his conclusions,
a detailed scrutiny of his arguments is
imperative.
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