The Hindu Business Line : Who will deduct my tax?

Aperson has come on deputation from Company A to Company B. His salary is paid by Company A. However, he gets deputation allowance from Company B. So, who has to deduct and issue TDS for X? Will X be treated as an employee of Company A or B?

Abdur Rehman Musba, e-mail

Section 192 makes it clear that when a person is simultaneously employed with more than one employer, he has to specifically call upon one particular employer to deduct tax at source from his salary income from all the employers. I think Company A is in an ideal position to do this and, therefore, X should disclose the fact of receipt of deputation allowance to Company A so that it can deduct tax on the combined salary income from A and B both.

ESTATE DUTY

Why we do not have estate duty?

Kanaka Sambath, Bangalore We did have estate duty but it was abolished in 1985. There is a clamour for its revival in knowledgeable quarters if only to correct the pronounced skew in income and wealth distribution.

The US imposes a 46 per cent estate duty. In fact, most of the western world have a system of estate duty in place though called by different names, such as death duty, inheritance tax, etc.

We seem to be harbouring under the wrong notion that there must be a cost-benefit justification for sustaining a tax or duty. On this ground, many economists are clamouring for the abolition of wealth tax too. They cannot be more wrong. The function of a direct tax law is not only to collect revenue but, more importantly, to tax unearned income and wealth. When an estate is inherited, admittedly the beneficiary gets it on a platter and there is no reason why he should not be called upon to pay a price for it. The extinct regime was marred by numerous exemptions and escape routes.

They all must be plugged and simplified before ushering in a new regime. Incidentally, there is every case for bringing back the regime of taxiing dividend in the hands of the shareholders and taxing capital gains earned from the bourses.

S. MURLIDHARAN

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