KOLKATA: Googlies are common to a budget. But left-arm unorthodox spin, often referred to as “chinaman” is rare. Well, finance minister P Chidambaram just bowled one on Friday, during his Union Budget 2008-2009 presentation.
According to Clause 4 of the Finance Bill, a new clause, christened (26 AAA) is proposed to be inserted in Section 10, whereby the income of a Sikkimese individual from any income arising out of the state of Sikkim has been exempted from income tax. Not only that, his dividend income from anywhere is also proposed to be exempted. And all this, with retrospective effect.
Specifically, the words are: “Any income, which accrues or arises to a Sikkimese individual from any source in the state of Sikkim or by way of dividend or interest on securities, shall not be included in the total income of such individual.”
Well, to say the least, even Sikkimese are puzzled. “If we are exempt from income tax that will be good, I guess,” said SK Chettri, a doctor by profession in Gangtok. “It’s one of those rare times that Sikkim has had special mention in the Union Budget,” he beamed.
Clause 4 of the Finance Bill says: “The term ‘Sikkimese’ has been specified in the said clause in pursuance to the Sikkim Subjects Regulation, 1961, rules made thereunder and relevant government orders issued in this regard. This amendment will take effect retrospectively from April 1, 1990, and will accordingly apply in relation to the assessment year 1990-91 and subsequent assessment years.”
“What might this mean?” wondered P Yenthenpa, a Sikkimese chartered accountant. “The Sikkim Subjects Regulation Act, 1961, refers to the Chogyal’s time. If this new clause applies to the 1961 regulations, by a maximum count, only about 50,000 or so residents of this state would qualify as Sikkimese,” he said.
“There are about 6 lakh Sikkimese now; 5.50 lakh to be precise as per the 2001 census. Voters are about 3.18 lakh, of which around 40 are salaried. I am not sure how many income tax payers are there in Sikkim, but hardly a fraction of this population will benefit if the qualification of ‘Sikkimese’ is by the 1961 regulations,” he said.
Another CA based in Gangtok said: “I am for example, Sikkim-born, Sikkim-educated. I have pursued my higher studies elsewhere, out of what is known as Sikkim quota. But I am not entitled to have the same benefits as a Sikkim subject, even though I have spent a lifetime here, for the past 30-odd years. In fact, many among the business class in Sikkim are not Sikkimese by the 1961 regulations. So, whom would this new law benefit.”
Chartered accountants are also puzzled as to how even those who qualify would get their IT refunds with retrospective effect. Tax experts point out that assessment cases of 1990-91 and subsequent years cannot be opened as income tax laws provide for a time bar, which is usually four years unless in very specifically disputed cases.
“All past files would therefore have long got closed,” a CA said.As the bails fly, even Kolkata-based chartered accountants of repute have begun to wonder who specifically Mr Chidambaram might have had in his mind when he announced the relief, because clearly, it’s not going to benefit many.
http://economictimes.indiatimes.com/Personal_Finance/Tax_Savers/Tax_News/New_tax_exemption_clause_leaves_Sikkimese_baffled/articleshow/2831820.cms
According to Clause 4 of the Finance Bill, a new clause, christened (26 AAA) is proposed to be inserted in Section 10, whereby the income of a Sikkimese individual from any income arising out of the state of Sikkim has been exempted from income tax. Not only that, his dividend income from anywhere is also proposed to be exempted. And all this, with retrospective effect.
Specifically, the words are: “Any income, which accrues or arises to a Sikkimese individual from any source in the state of Sikkim or by way of dividend or interest on securities, shall not be included in the total income of such individual.”
Well, to say the least, even Sikkimese are puzzled. “If we are exempt from income tax that will be good, I guess,” said SK Chettri, a doctor by profession in Gangtok. “It’s one of those rare times that Sikkim has had special mention in the Union Budget,” he beamed.
Clause 4 of the Finance Bill says: “The term ‘Sikkimese’ has been specified in the said clause in pursuance to the Sikkim Subjects Regulation, 1961, rules made thereunder and relevant government orders issued in this regard. This amendment will take effect retrospectively from April 1, 1990, and will accordingly apply in relation to the assessment year 1990-91 and subsequent assessment years.”
“What might this mean?” wondered P Yenthenpa, a Sikkimese chartered accountant. “The Sikkim Subjects Regulation Act, 1961, refers to the Chogyal’s time. If this new clause applies to the 1961 regulations, by a maximum count, only about 50,000 or so residents of this state would qualify as Sikkimese,” he said.
“There are about 6 lakh Sikkimese now; 5.50 lakh to be precise as per the 2001 census. Voters are about 3.18 lakh, of which around 40 are salaried. I am not sure how many income tax payers are there in Sikkim, but hardly a fraction of this population will benefit if the qualification of ‘Sikkimese’ is by the 1961 regulations,” he said.
Another CA based in Gangtok said: “I am for example, Sikkim-born, Sikkim-educated. I have pursued my higher studies elsewhere, out of what is known as Sikkim quota. But I am not entitled to have the same benefits as a Sikkim subject, even though I have spent a lifetime here, for the past 30-odd years. In fact, many among the business class in Sikkim are not Sikkimese by the 1961 regulations. So, whom would this new law benefit.”
Chartered accountants are also puzzled as to how even those who qualify would get their IT refunds with retrospective effect. Tax experts point out that assessment cases of 1990-91 and subsequent years cannot be opened as income tax laws provide for a time bar, which is usually four years unless in very specifically disputed cases.
“All past files would therefore have long got closed,” a CA said.As the bails fly, even Kolkata-based chartered accountants of repute have begun to wonder who specifically Mr Chidambaram might have had in his mind when he announced the relief, because clearly, it’s not going to benefit many.
http://economictimes.indiatimes.com/Personal_Finance/Tax_Savers/Tax_News/New_tax_exemption_clause_leaves_Sikkimese_baffled/articleshow/2831820.cms
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