Dear Editor,
The straight answer is emphatic ‘no’. If it is taxed it amounts to double taxation. The husband has already incurred tax on that income. Because the husband parts with a portion of his income to meet the household expenses which he pays to his wife. It is not an earning by and income to the wife. But when the wife saves the money after meeting household expenses and if that saving is invested, the income earned by such investments attracts tax. It is not illogical. This is something that everyone can understand. Money given to wife is considered as gift in the tax law. Wife is considered as a relative.
Hence money given as gift to relative is not taxable. Money given as gift to the wife does not obviate the tax liability on the part of husband. Gift tax is payable when any individual receives cash gifts exceeding Rs. 50,000/- in a single financial year. The amount in excess of Rs. 50,000/- attracts income tax to the giver and gift tax to the receiver. Double taxation is manifest in the name of income tax and gift tax. Double taxation is unfair. It would be fair if the giver of the gift is removed from the tax bracket. If tax has already been paid that proportion of the gift tax which the gift receiver pays has to be given as exemption to the giver in the next year. Taxation law needs to be revamped. There are four countries viz., Bermuda, Monaco, the Bahamas and the United Arab Emirates (UAE) where the income tax is not payable by the citizens of that country.
In fact, Dr. Subrahmanian Swamy had raised pitch for income tax abolition in India. It was a cry in wilderness. There was a public outcry to keep the payment of dearness allowance (DA) tax-free on the ground that the DA is paid to offset the increasing cost of living. Salaried class do not need DA if the cost of living is stabilized. Stabilization of cost of living is impossible because the price behaviour of goods and services cannot be controlled or tamed. What is given as DA is only to absorb the increased cost.
This argument was not accepted by the Supreme Court. Hence, DA is continued to be taxed. Digital payments would be in the Tax authorities lens. Cashless economy in toto is quite convenient. But at the same time, every sundry expense will be at display. Further, the number of pass books to be obtained swells. Even a layman knows, to know the balance, one need not get the pass book entry.
But the need for pass book entry cannot be dispensed with in toto. When a person wants to take a glance at the transactions made through Bank in the long or recent past, pass book is a convenient record to know. When pass books are sought frequently, the banking authorities grumble. Digital payment should be used as a substitute where the payer and the payee are at remote places in which case cash payment is not possible, where the amount involved in the transaction is high and when carrying heavy amount is risky. Digital payment and cash payment should go hand in hand. One cannot be foregone for the other.
K.V. Seetharamaiah