# Nothing is certain but death and taxes # ~ an oft repeated fatalistic and sardonic proverb. It draws on
the actual inevitability of death to highlight the difficulty in avoiding the
burden of taxes. Though this is
attributed to many – Benjamin Franklin is widely believed to have authored the
present form.
There
are Direct and Indirect Taxes – prominent among the Direct is Income Taxation,
a good source of revenue to the Government from time immemorial. There is no
measure of time as to when money (material wealth) became more important even
in spiritual kingdoms. According to
Kautilya'sArthashastra - the art of governance and foreign policy - artha has a
much wider significance than wealth. An important part of the Arthashastra is the
`science of economics', which, inter alia, includes taxation, revenue
collections, budget and accounts. In
Raghu Vamsa, poet Kalidasa eulogizing King Dileepa said .. ``it was only for
the good of his subjects that he collected taxes from them just as the sun
draws moisture from the earth to give it back a thousand time.''
After
the great Independent uprising [Mutiny of 1857], British Govt faced acute
financial crisis. To fill up the
treasury, the first Income-tax Act was introduced in February, 1860 by James
Wilson, who became British-India's first Finance Minister. Income was
classified as under - income from: landed property; professions and trade; from
securities, annuities and dividends; and from salaries and pensions. Later Agricultural
income too was subjected to tax. After
Independence, a new enactment titled `Income-tax Act, 1961' came into being.
Taxation
falls in the realm of public finance, the most rapidly developing branch of
economic theory. The basic objective of
taxation is to raise money needed to finance government expenditure. But taxes
have other effects too. As a factor affecting the pricing of goods, they
determine what to produce and in what measure. By taxing the affluent sections
of society more, they change the distribution of incomes and wealth. There is always a feeling that salaried people
by force contribute to tax more than some professional earners, who hide their
salary and do not pay tax fully !
For
the middle income group of salaried tax payers, month of March has been
menacing with higher cut in salary to Income tax (primarily because it was not
well planned or failure to comply with the tax based savings commitment) – over
the years, the Income tax department has come to acquire an image of an agency
that usually harasses taxpayers, including the honest ones.
That image is changing ! – now many of us file Tax returns
Online and get refunds within days of filing ~ and to add more, in the last few days several individuals are
surprised to receive a 'Certificate of Appreciation' in their mailbox, with
some even mistaking it for a spam mail.
Yes it is an Appreciatory Certificate – issued by Ministry of
Finance, Central Board of Direct Taxes – that of the Government acknowledging the contribution of individual tax payers in
paying taxes within the prescribed time and prompt filing of Income Tax
Returns. Recently, the Honourable Finance Minister, Shri Arun Jaitley
handed over certificates of appreciation
issued by CBDT honoring select tax payers for such contribution. This step marks the first effort by the
Government to directly communicate to the tax payer its appreciation for that
contribution. CBDT has started sending
out certificates of appreciation to
individual tax payers by e-mail in various categories on the basis of the level
of taxes paid by them for the current Assessment Year 2016-17 where taxes have
been paid in full and tax payers have no outstanding tax liabilities and where
the return is e-filed within the prescribed due date.
The
tax payers may display these certificates in their homes / offices. The
categories for individual taxpayers and the number of certificates being issued
in the first round are: i. Platinum : Tax contributed Rs. 1 Crore and above ii.
Gold : Tax contributed Rs. 50Lakh to Rs. 1 Crore iii. Silver : Tax contributed
Rs. 10Lakh to Rs.50 Lakh iv. Bronze : Tax contributed Rs. 1Lakh to Rs.10 Lakh
The CBDT urges taxpayers to e-file their returns in time and verify their
return by submitting the Electronic Verification Code online or sending their
ITR-V within the 120 day period so that they can be also acknowledged for their
contribution.
On
the subject of personal taxes – do you ever feel, burdened, having done
something great yet ended up paying taxes, read more ! She has flipped,
tumbled and leapt her way into the hearts of millions over the course of the
Rio Olympic games, but when Simone Biles
returned home, she was not only part of celebrations but also had to pay hefty
tax !! The 19-year-old won five Olympic medals - four gold and one
bronze. She cemented her title as the world's best gymnast by taking home the
gold in the all-around after three successive world championship titles - a
feat only accomplished by three others in history. However, the Winning did cost her. She reportedly had a tax bill close to
$43,560 (Rs.29 lakhs approx) – that is an estimated tax liability based on the reported
$2m that she accumulated in endorsement
deals and assuming she is charged in the highest income tax bracket in the US -
39.6%.
Biles
is not alone, her fellow US medallists too were slapped with tax bills for
their victories as well. American Olympians are subject to a so-called
"victory tax" - a tax on both the money they receive from the Olympic
committee for winning and on the value of the Olympic medal. US athletes who won
a medal at the Rio games took with them the hardware and a cash bonus from the
US Olympic Committee. Gold medallists received $25,000, silver medallists got $15,000,
and bronze winners $10,000. Those
winnings are taxed as income, the same way Americans are taxed on other prize
money, like lottery winnings.
It
is not money and endorsements, but medals too – medals are also given a value
and taxed. The value is based on the value of the materials the medals are made
of. Gold medals - which are mostly made of silver with a gold plating - are
worth roughly $600 based on current commodity prices, silver medals are worth
close to $300, bronze medals - which consist mostly of copper - have barely any
monetary value, approximately $4. For US athletes like Michael Phelps and
Simone Biles, who secured multiple victories, including multiple gold medals
that bill perhaps was much higher.
With
regards – S. Sampathkumar
18th
Oct 2016.