Chennai: To all those who always felt incomplete just because of not knowing the income-tax law, the golden opportunity is soon to come, in the form of a fructified Direct Taxes Code, once the due process of Bill-turning-into-an-Act is over. The baseline has been drawn and we the novices and the tax experts are all on that, especially after Chiddu’s chiding of all the professionals who wanted to read the code through the lens of the existing Income-Tax Act.
Let’s get going, therefore.
<b>Special and ordinary</b>
Expenditures rise to meet income, says C. Northcote Parkinson. Only, there are two incomes to meet, those from special and ordinary sources. However special you feel as an employee, house-owner, business-person, the bland ‘ordinary sources’ will have incomes from employment, house property, business, and capital gains.
A politician is a man who will double cross that bridge when he comes to it, cautions Oscar Levant. Yet, we have our politicians who, through the code, have promised the avoidance of double taxation, in two lines, to be sure. “Any income which is included in the total income for any financial year shall not be included in the total income for any succeeding financial years. Any income which is includible in the total income of any person shall not be included in the total income of any other person, unless otherwise provided,” assures Section 16.
Economics is extremely useful as a form of employment for economists, concedes John Kenneth Galbraith. Similarly, tax is extremely useful as a form of employment for accountants, at least as long as the law is complex.
Breaking that jaded mould are the new definitions, crisp and clear. Sample these: “The income derived by a person from any employment shall be computed under the head ‘Income from employment.’ The income computed under the head ‘Income from employment’ shall be the gross salary as reduced by the aggregate amount of the deductions referred to in Section 22. The gross salary shall be the amount of salary due or paid (including arrears or advance) to a person, by or on behalf of his employer or former employer, in the financial year.”
Anybody can write a film script ‘cuz it has been reduced to a formula, rues Dirk Benedict. There are many formulae in the Code that you’d stumble upon. Here is an example, on computing indexed cost of acquisition of an investment asset, thus: A X B/ C, where A = the cost of acquisition of the asset; B = the Cost Inflation Index for the financial year in which the asset is transferred; and C = the Cost Inflation Index for the financial year immediately following the financial year in which the asset was acquired…
If formulae frighten you, it should be sobering to imagine a one-line tax code that simply lays down: T = WYPTNMTAL2S, where LHS is ‘tax’ and RHS = ‘what you pay till no more tears are left to shed.’
The general public is a ferocious beast; one must either chain it or flee from it, warns Voltaire. If you always wondered what ‘general public’ means, the code defines the phrase, as ‘the body of unascertained persons sufficiently defined by some common quality of public or impersonal nature.’ Or, in short, the faceless citizens.
“‘The value of any variable in a formula shall be deemed to be nil, if the value of such variable is indeterminable or unascertainable.’ Means?”
“Indeterminable or unascertainable!”
Keywords: Tax code,