R. Srinivasan

R. Srinivasan, also known as Ravi Srinivasan, is cursed with a magpie brain, which compels him to peck at anything shiny which catches his eye. Some of the bits turn out to be useful!

R Srinivasan

How about 'Plain English' tax rules?

| Updated on March 13, 2013

Chidambaram

The Finance Minister made three promises in his Budget speech this year: one to women, another to youth and the third to the poor. As a politician of no mean skill, Mr. Chidambaram made sure that he hit all the check boxes necessary to reach the largest vote banks,in his last Budget before election mode sets in. One really wishes that he had made a fourth one though -- to not add to the burden of the long suffering taxpayer, by couching all tax proposals in impenetrable gobbledygook. In other words, keep the tax proposals, like the simplified 'end user agreements' put up by web service providers, in 'Plain English'.

Now that may not be too much to ask, one might think. After all, if you want someone to pay tax on something, how difficult is it to put your demand in simple language? "Thou shalt pay one third of what you earn to the government' sort of thing? After all, the Bible, which is thousands of years old, manages to make itself pretty comprehensible even to the newest convert in a strange land or culture. “Every tithe of the land, whether of the seed of the land or of the fruit of the trees, is the Lord’s; it is holy to the Lord,” says the Bible.

And the message was pretty clearly understood: a tenth of what you grow or reap is the Lord's. But now, we have tax men and accountants and tax lawyers queering the pitch. And the result is a kind of specialised language which is nominally in English, but would be clear to no English speaker, other than a member of one of the three professions mentioned above. Don't believe me? Check out this example from this year's Budget, amending the definition of a 'capital asset': "It is proposed to amend item(b) of sub-clause(iii) of Clause 14 of Section 2 so as to provide that the land situated in any area within the distance, measured aerially (shortest aerial distance), (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and..."

In fact, the full 'explanation' carries on for several sentences more, at the end of which you are no wiser as to what exactly has changed! Clarity in language is important, of course. A small and apparently innocuous clause in the Budget on the eligibility condition for availing benefits under double tax avoidance agreements cause consternation in the market and the Sensex fell 290 points. The FM had to go on national television to explain what he actually meant by that clause! But why should it take a market crisis to get a simple explanation?

The FM lamented the small number of tax payers in India in his speech. Pointing out that India's tax to GDP ratio was one of the lowest among developing economies, he stressed: "There are 42,800 persons – let me repeat, only 42,800 persons – who admitted to a taxable income exceeding Rs 1 crore per year," clearly hinting that the number should be much larger. Perhaps more numbers could come forward if everybody knew exactly what they had to pay!

Published on March 13, 2013

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