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Speeches in Parliament Vol. (III)-26

I wish I could have spared even those with an annual income of more than Rs. 15000 from the burden of paying additional income tax but if more money is to be raised it cannot be said that no part of it should be raised by way of personal taxation. If personal taxation is to be raised it can hardly be argued that in our conditions those with incomes above Rs. 15000 per annum need particularly to be spared. I do not think that anybody can argue that way.

The charge that my proposals would discourage savings is sometimes sought to be justified with reference to the changes proposed in regard to deduction in lieu of contributions to life insurance, provident fund and the like. Here, as far as savings of Rs. 1,000 and below per annum are concerned, actually the deduction is raised to a full hundred percent, so that there is in fact a greater incentive for savings for the bulk of income-tax payers for whom the total annual savings cannot exceed the figure of Rs. 1,000. In fact, even up to a total saving of Rs. 5,000 per annum the deduction now permissible under the new rules would be greater than what it was before, so that the incentives for savings will increase right up to the level when such savings are a little short of Rs. 5,000 per annum. It is only in cases I agree of those who save more than Rs. 5,000 per annum that the deduction now would be less than before. But surely it is not irrelevant to ask, how many persons there are in this country who can save more than Rs. 5,000 per annum. It is a question which could honestly be asked by everyone to oneself. The vast majority of people, the largest possible number, cannot save beyond Rs. 5,000 per annum. I have made all possible provisions to see that there is an incentive for saving, as far as this part is concerned. Those who want to save more than Rs. 5,000 per annum, there is a disincentive. I do not want to enlarge on this point. I would only make one more point in this connection.

If the quantum of deduction is reduced somewhat for saving above Rs. 5,000 per annum, then the ceiling on total saving which can qualify for deduction is raised-this is one point which the Hon. Members should take note of-from Rs. 15,000 to Rs. 20,000 per annum. In fact, even for savings between Rs. 5,000 and Rs. 15,000 per annum, since the tax rates have gone up, the value of every rupee of deduction permitted would now be greater. I hope Shri Piloo Mody would agree with that. I fail to see, therefore, how my proposal in respect of personal taxation can be considered to be detrimental to a large flow of saving over a period.

Another very fashionable argument was made with regard to the budget, namely, that it has adversely hit the common man. I quite understand that point. As I have said in the beginning, because of certain levies on certain items it has affected the common man. I cannot say that the common man is not affected. But what ultimately is the test, what major test one should apply to see whether it substantially affects the common man or not? (Interruptions).