ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Income-Tax Concessions Implications for Equity and Growth of Tax-Base

Income-Tax Concessions: Implications for Equity and Growth of Tax-Base V N KOTHARI (EPW, February 21) argues that the income tax base in India is being eroded in the name of tax concessions as incentives for savings. On the basis of a broad analysis of the income tax/GDP ratio and some limited hypothetical arguments, he reaches a very serious conclusion that "by extending exemptions to the principal amount invested in particular forms such as the NSC, we have resorted to a costly and inequitous method of borrowing. A full or partial exemption of interest income would have been enough". Considering the profound implications of his conclusions, a detailed scrutiny of his arguments is imperative.

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