Double tax trouble

Budget 2018 proposes a 10 per cent Tax on Dividends Distributed by Equity-oriented Mutual Funds effective from April 1. The income of MFs consists of three components: profits/capital gains, interest, and dividends. The first two components are already taxed; now it is proposed to tax the third component. That is, MFs will have to pay taxes on the entire income earned. Only then can they make the balance available as surplus to be distributed as dividend among their investors.

Now, they are required to pay tax again on this surplus at 10 per cent before distribution to investors as dividend. In short, the same income is taxed twice; once before reaching the MFs and again before reaching the investors as dividends. This is not justified. MFs are not the end-beneficiaries, but only intermediaries; the investors are the real consumers. Also, the tax is levied uniformly irrespective of the income slab fixed for the tax rate applicable to a particular investor. Even investors with no taxable income are taxed at the same rate. The Government must reconsider this proposal exempt MFs from paying DDT.

Chennai

It is beyond comprehension how the highest court, in spite of the issue being sub-judice, allowed the various agencies so far to pressure the common people to link Aadhaar within a stipulated date and threaten deactivation of services if the directive was not followed. It is unfortunate that a case affecting the entire population has been dragging for months without resolution.

There are lurking concerns as to whether the system is robust enough to thwart mischief; as we have seen a telecom provider misusing the data to open and access bank accounts without authorisation. The concerns regarding violation of privacy, data leakage and so on need to be examined thoroughly.

Chennai

We are mature enough to understand that the RBI cannot physically be there in every nook and corner of banking activity to check fraudulent activity. But we do expect the regulator to put in place foolproof systems and monitor them, so that it can take remedial measures in time.

Instead of blaming the Government, Governor Urjit Patel must accept responsibility and ensure that the RBIis sharp, focused and alert to read the red flags in time.

Belagavi, Karnataka

The PNB scam was due to employees colluding with importers and not because of a wrong foreign exchange control policy. The RBI should have instructed banks to put in place internal regulatory measures in the use of SWIFT to avert scams. The ban on LoUs and LoCs, a system followed all over the world, is uncalled for.

However, the move could be a blessing in disguise for exporters as importers rush to buy dollars from the market. Consequently, the rupee will depreciate further against the dollar in the short term, and exporters will realise more proceeds from their outstanding payments and from the current outbound shipments. Further, as the cost of imports goes up, import dependent manufacturing costs will go up too, leading to cost-push inflation. The department of financial services should immediately advise the RBI to withdraw or rescind the notification and thus save both the country’s image overseas and import-intensive local manufacturing clusters.

New Delhi

It is unfortunate that in the seven days since Parliament was reconvened for the second half of the budget session, the opposition parties have continued to hold it to ransom. Despite scathing remarks that the Government so “tactfully” managed to get the Finance Bill 2018 passed without debate or voting, it goes without saying that the “united” Opposition must take the blame for letting the Government so easily ‘escape’ parliamentary scrutiny of various key budgetary proposals. Are we a democracy or a mobocracy?

Panchkula, Haryana

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