ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Doing Away with Direct Taxes

Doing Away with Direct Taxes DIRECT taxes are anathema to the native rich; these are equally anathema to the World Bank and the International Monetary Fund. Such taxes grossly affect entrepreneurial incentive, say the foreign financial institutions, and their incidence should therefore be reduced to a minimum. In composing his recent budget, the finance minister could not but faithfully follow the Fund-Bank injunction. Undeterred by the huge deficit on the revenue account, he has gone ahead and as good as done away with the wealth tax. The capital gains tax has been smothered beyond recognition. And the rates of income tax have been slashed all the way. The finance minister has also raised the level beyond which income is to become taxable. That is not all. While responding to the general debate on the budget, he has promised to consider carefully the pica of further lightening the burden of income taxation, for example, by re-introducing some of the exemptions he had earlier pro- posed to disallow.

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