Kanu H Doshi is a commerce graduate from Bombay University and a fellow member of the Institute of Chartered Accountants of India.
He is now a partner of Kanu Doshi Associates, chartered accountants, Mumbai. Doshi, having specialised in taxation, is at present the tax consultant to UTI and several other mutual funds and companies on taxation, company law and financial matters. He is also the dean -- finance, at Welingkar Institute of Management Development & Research, Mumbai.
In an exclusive pre-budget interview with Personalfn, Doshi presents his wish list for the Union Budget and also offers Finance Minister P Chidambaram some advice in his inimitable style.
What are your primary expectations from the Union Budget 2008-09?
A very simple, but most vital principle for any Finance Minister (FM) laid down in Chanakya's Arth Shastra is "to collect taxes from citizens the way a Bee collects Honey from the flowers - quietly without inflicting pain".
With general elections due in 2009, FM should emulate Chanakya and make Aam Admi feel happy that his life has been made bit more cozy and easy in the ensuing financial year by raising basic exemption limit to Rs 250,000 across the board.
Considering the all time high savings rate of 34 per c of Indian tax payers, citizens could be further rewarded and encouraged by raising the limit of deduction under Section 80C to Rs 200,000.
What are the specific areas that you would like the Union Budget to tackle?
With unprecedented buoyancy in all tax revenues i.e. direct taxes like Income Tax, Corporate tax and also, indirect taxes like Service Tax, Excise and Customs Duties, the FM should take a bold step to reduce the taxes across the board. He could begin by abolishing all surcharges and education cess. To high net worth tax payers, companies and firms, it will result in about 4 per cent tax saving (i.e. from 30 per cent plus 10 per cent plus 3 per cent = 33.99 per cent).
In any case, continuing these surcharges past three years grossly violates the basic tenet of levy of any surcharge - which is "only for a specific purpose and only for a limited period".
Second, there was no economic justification for "education cess". Providing funds for education of the citizens' children is of paramount importance and as vital as defense of the country from all external threats.
If the FM can levy education cess to meet the cost of education, then why not defense cess for defense cost, health cess, food cess, and so on. What are the tax collections meant for? Are the taxes that citizens pay only to be used to pay for bureaucrats' salaries and tax-free perquisites like palatial houses and battery of servants to look after ministers and politicians?
In any case, taxes like Fringe Benefit Tax and Bank Withdrawals Tax have been major irritants to citizens without corresponding large tax collections for the exchequer. The cost of collection of these levies and cost of unpleasantness that these two taxes have generated far exceed the tolerance levels.
Any words of advice for the finance minister?
Yes, the tax administration needs to be made tax-payer friendly. Tax officials need to treat tax payers as welcome customers rather than as helpless victims to be exploited and threatened.
Make the most of SEBI's "zero entry load" guideline.
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