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We have the following suggestions based on basic tenets: Unearned income should be taxed at higher rates than earned income (e.g., manufacturing, services units income), compliance costs should be low, tax avoidance methods should be minimised and litigations promptly addressed. Capital gain on indexed assets should be at normal income-tax rates. Dividend up to 15 per cent should be tax deductible (as expense). This will reduce higher taxation incidence. Non-individual incomes should be taxed at maximum marginal rates e.g. HUF entity is largely an urban phenomena specially the new creation, and is being used as a tool to avoid tax. TDS returns should be filed once in six months and tax audit report limits should be increased from Rs 40 lakh to Rs 5 crore and Rs 10 lakh to Rs 1 crore.

Sharad Mohan, Maheshwari & Sharad,

Chartered Accountants, New Delhi

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