THE BUDGET-A Tale of Two Committees

THE BUDGET A Tale of Two Committees ACCORDING to all objective assessments made so far the Wanchoo Committee's Report was shallow and superficial. Yet this is the one Report that the government has taken closest to its heart, Compare to it the fate of the Report of the Committee on Taxation of Agricultural Incomes. A comparison of their "major recommendations is instructive. The Wanchoo Committee had found that the evasion of direct taxes was not only high hut mounting over the years. So it recommended that the best way of tackling the problem of evasion was to reduce the rates applying at the highest levels. The Committee noted that the non-taxation of agricultural incomes was inequitable and also provided a ready avenue for evasion of income-tax on non-agricultural income. So it recommended that agricultural income; should be aggregated with other income and taxed as such. The Wanchoo Committee noted also that "the institution of the HUF is widely used for tax avoidance" hut still recommended that the HUF should continue to be treated as a separate tav entity, though it should be taxed at higher rates than individuals. Also, it was brought to the notice; of the Committee that even among 'individual' tax-payers there was a widespread practice of diverting their incomes to members of their families, but the Committee could not bring itself to recommend the clubbing of family incomes.