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Articles: My Thoughts | | WHY INTEREST INCOME WHOLY TAXABLE AND DIVDENDS ARE FULLY EXEMPT? | |
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| Dear Mr. katakam sreeram
Thank you very muh for your comments.
I fully agree with you on the advantages of abolition of dividend tax. But I am unable to agree that therotically tax paying entities are same. Because therotically joint stock company is separate legal entity from its shareholders. Even though shareholders are owners of the company , Company's assets and lliablities are not shareholders assets/liabilities. They belongs to company only. For the convenience Govt allowing company to pay tax on be half of shareholders. Strctily this tax also should be(as an income) added to the dividend income , as in the case of tax paid by employer on be half of employee.
regards
Posted by: Mr. Madhu Seshanand At: 5, Mar 2003 11:35:24 AM IST
Hi
I think the justification for abholition of dividend tax is not because the company is paying taxes on behalf of individuals......
its the paradox of pinching at two different spots might still lead to same amount of pain.......
so instead of taxing the company or individual at 50%......whereby u r creating a strong pressure group against the tax........u tax the company and the individual separately......25...25 or thereabout......
thereotically the tax paying entities are same in both the cases..........
only this time we have divided them into two groups.........
in the process we have satisfied the third category which is the management of companies which can show a higher ROI's at the company's premises........
its a different matter that some of it used to vaporises (in terms of Div tax again) before it reachs your home......
now abholition really lets you have full amount in your account......
the otherway to look at it is that the 50% has been reduced to 32%....(only example rates....pl check the actuals)........
only the arrangemnet is more convinient to GOI.....it is easier to monitor tax payment by companies compared to millions of individual investors.....also removes the cost of ensuring TDS....so on.
Posted by: Mr. sreeram katakam At: 3, Mar 2003 4:57:41 PM IST
Dear Mr.Sankar
Thank you very much for your comments.
I fully agree with you on excess taxing corporates and rich people.It holds true only when these corporates and high income people are honestly paying taxes!!!
Otherwise who will bear the burden of taxes?Those who cannot avoid taxes(salaried class normally).
regards
Seshanand
Posted by: Mr. Madhu Seshanand At: 28, Jan 2003 12:25:33 PM IST
Dear Mr.Yugandhar
Thank you very much for your comments.Yes I agree with you on creation of capital if investment in shares encouraged. In long term this will increae the wealth of the nation too.The important point is dividends cannot be exempted from tax as dividends are also income like any other in the hands of share holders.Moreover India's capital market is not in such a terrible state to encourage investments in shares only by total abolishing of dividend tax.
And I think the investment of middle class cannot be treated as no good to the society. Till today Government forcing middle class(mainly salaried) to invest in Govt securities like infrastructure bonds, NSC etc.at low return to save their tax. This is Govt policy.If investment in shares eligible for exemption of tax ,this class may have invested in shares to save tax. Now at least they can decide where to invest profitably without any indirect forces.
regards
Seshanand
Posted by: Mr. Madhu Seshanand At: 28, Jan 2003 11:53:51 AM IST
Mr.Yugandhar
Posted by: Mr. Madhu Seshanand At: 28, Jan 2003 11:17:27 AM IST
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