Always the right choice
Sir — Atmaja, the Association of Adoptive Parents, Calcutta, expresses its anguish at the tone the report, “Crackdown on infertility clinics” (Dec 3), takes towards adoption. The report uses phrases like “they finally found solace in adoption” when they cannot have “a baby of their own”. Adoption is not the second best way of attaining parenthood. Our experience shows that adoptive parents can do as well as biological ones and adopted children integrate so well into adoptive families that they become indistinguishable from biological offspring. We however agree that infertility clinics, by and large, exploit childless couples. Doctors should provide adequate information, within a reasonable period of time about the probability of each line of treatment, and point out the avenue of adoption. Childless couples are made to wait too long during which they are both emotionally and financially exhausted. Adoption agencies are reluctant to place children with couples who are above 45, a limit that many cross while hoping for the infertility treatment to work.
Swapan Naskar, Calcutta
Sir — Ashok Mitra gets some of his facts wrong in “Grin and bear the loss” (Nov 1). He calls the value added tax a “Centrally-administered tax”. But it is not so much the Centre, but an empowered committee — a joint forum of finance ministers from all states — which will be laying out the modalities of VAT. The Centre is here the guiding force and not the administrator, strictly speaking.
Mitra names a number of countries who have considered it unwise to introduce VAT. Quite surprisingly, he remains silent about a major economic power like China having gained rich benefits from taxation like VAT. Mitra infers that the United States of America rejected VAT because it was fiscally not rewarding. The reason is quite different. Unlike the Indian Constitution, which has many grey areas as far as distribution of powers between the Centre and states goes, and is clearly biased in favour of the Centre, the US constitution clearly demarcates the areas of operation of the federal and state governments. It is the US senate which rejected VAT because it would rob the states of fiscal independence. Moreover, VAT essentially aims at collecting tax at the last point of sale and thereby maximizing revenue collection.
Indian states have little choice of methods if they want to maximize their revenue. The current system of collecting sales tax at the first point of sale has proved disastrous. It has opened up a can of worms in the form of under-invoicing and a vast grey market, resulting in lower collection of taxes. State governments desperately need to replace this weak fiscal structure. Even the earlier system of multi-point taxation did not succeed because of poor monitoring and a low level of tax compliance by dealers, which denied state governments of their share of sales tax. VAT, on the other hand, builds a stronger structure, which slowly and surely expands the tax net and creates scope of expansion.
Susanta Kumar Biswas, Calcutta
Sir — The Kelkar committee’s recommendations are revenue-neutral, in the sense that what it gives with one hand it takes away with the other. The recommendations mostly aim to simplify the revenue structure, but the task force should have kept in mind that tax laws should aim not only to raise revenues, but also to help further industrial growth in the country by allowing tax incentives to industries. In fact, indirect taxes may be designed so as to give an impetus to labour-intensive industries.
It would be unwise to fix the tax exemption limit at Rs 1 lakh per annum, as Kelkar has recommended. That would narrow the tax base. The limit could be raised to Rs 60,000 at most and those earning between Rs 60,000 and Rs 1.5 lakh annually can be taxed at 10 per cent, and the rest as suggested by the Kelkar panel. It would also be unfair to phase out house-loan sops. Withdrawal of the sops will deliver a blow to the construction sector, which in turn feeds industries like cement, steel and so on. Areas like health and education will also suffer if the retrograde recommendations on donation are implemented.
B.C. Dutta, Calcutta
Sir — The Kelkar committee report has apparently set off a spate of healthy debate on indirect and direct taxes in many forums. That this had been the government’s desire is evident from the fact that the report had been posted on the web and people invited to comment on it. However, those opposing the report number more than those supporting it, although there is a general agreement with what the committee has tried to achieve — reform taxation with a view to raise tax to gross domestic product ratio, reduce tax evasion, broaden tax base, provide relief to low or lower middle class and above all simplify the procedure of tax collection. Those supporting the report fail to quantify the likely benefits that will accrue from the adoption of its recommendation and those who oppose it do not indicate alternative ways to achieve the same objectives. Debates such as these only lead to confusion.
C.R. Bhattacharjee, Calcutta
Sir — There is a need to reform corporate tax provisions, particularly for sick and small companies, by treating the sale of depreciable assets not as short-term capital gain but as business income, as was the case prior to 1988-89. The provision of short-term capital gain under Section 50 of the income tax law should be amended. The present provision inadvertently works against sick companies, especially those which have accumulated losses and need to dispose of their depreciable capital assets. Under the changed provision, past carried-forward business losses, if any, cannot be set off against such “short-term capital gain”. This results in an extra tax burden on sick companies. Hence, gains from the sale of depreciable assets should not be regarded as income but as balancing charge.
R.N. Lakhotia, New Delhi
Sir — Why must Sourav Ganguly’s photograph feature so frequently and so prominently in The Telegraph' Or inane write-ups about his wife' Front-page coverage is understandable if he has scored a century or has contributed significantly to an Indian victory. But even if it is one of his teammates who has done well on the field, it is his smiling face that we see all over the page the next day.
Priyam Banerjee, Calcutta