Despite some weak protests from the BJP the direct tax code in its full avataar has passed through the Rajya Sabha.
Now it will go to a committee and then should pass muster at the Lower house also. It is one of the worst interruptors of the whole process of compounding – taxing the capital gains at the same rate as your income. The government is just looting us in 2 ways – by keeping the inflation high we will erode our wealth, and then we pay tax on that eroded wealth. Of course this is good to great news for my CA friends – the old game of HUF, Association of Persons (AOP), and numerous private limited companies will all come into play :).
Please do not rejoice the so called EEE for your PPF, voluntary PF, life insurance policies etc. If you are about 30 years of age, by the time YOU need to withdraw it will be in the EET mode.
Those who have not appreciated the impact of inflation in the wealth destruction process, the stupid way of calculating the ‘total salary’ ….etc. can rejoice. Otherwise this is quite a bad act.
Yes those whose taxable income is less than Rs. 10 lakhs can feel better…
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