It is a challenge on hand for Mr. Chidambaram. The possibility of Budget 2008-2009 being the last Budget of the present Government gives rise to greater compulsions and expectations for a dream budget fulfilling the wish list of all and sundry. With all the industries and ministries clamoring for tax sops and relief, the Minister will have his hands full balancing the demands of the industries/ministries and the exchequer. Wire money online to India with Xoom.com for as low as $4.99. The recent reports of slow down of the industrial growth and the volatility of the stock markets too would be playing on his mind. He would for sure want to send out a clear message to the Foreign Investors, of India being a stable, growth oriented and transparent investment destination. Industry too will need to be reassured with a tax-payer friendly regime to give an added impetus to the economic growth. Rationalization of the rates of the multifold tax levies, by way of Income Tax, Fringe Benefit Tax, Dividend Distribution Tax (‘DDT’) on corporates, would be one of the most vexing issues that the FM would need to address. The levy of Income Tax and DDT, currently pegged at 33.99 per cent and 16.99 per cent respectively, makes the marginal tax rate of domestic companies on distributed profits as high as 43.3 per cent (compared to corporate – rate of 25 per cent in China, with additional10 per cent withholding on profits distributed by foreign owned companies). With buoyant tax collections in 2007-08, there is significant pressure on the FM to reduce the effective rates; the Minister himself has acknowledged that reduced tax rates invariably lead to widening of tax base and better compliances. The new tax code aimed at simplifying the current tax regime continues to be a promise that has been delayed. In the interim, the FM should consider easing at least some of the compliance obligations of the tax payers in the budget (viz the onerous duty imposed on tax payers under the withholding tax provisions coupled with provisions forfeiting the tax deduction of expenses on which withholding is inadequate/has not been effected). A time bound dispute resolution mechanism would also help in mitigating some of the rigors being faced by the tax payers. Aligning the domestic law provisions relating to taxation of foreign companies in India (viz business connection, existence of permanent establishment) with the [...]
Archive for February 20th, 2008
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HALF-OPEN DOOR POLICY
February 20th, 2008 
krishna Highly skilled Indian migrants in Britain seem to be mountaineering on molehills. They are contesting the British government’s claims that recent changes made to the visa rules, while not retrospective, do not grant an inalienable right for any migrant to settle in that country. Parliamentary Under-secretary, Lord Hunt in the Ministry of Justice, reportedly reiterated this last week while clarifying the government’s position to representatives of Indian migrants. Tens of thousands of Indian migrants are concerned about the ‘retrospective’ nature of the new rules in Britain’s Highly Skilled Migrants Programme (HSMP). These jitters, however, may be misplaced as it is up to the Home Office to decide when, and how, to modify its immigration policy. If it wants certain criteria to be met before migrant workers are extended visa extensions, then so be it. After all, this is a universal practice and every country has the right to decide on the extent of liberalisation in its immigration laws. Skilled and qualified migrants, in any case, need not be bothered about meeting the requisite eligibility criteria. The same goes for the points system and etiquette guidelines for immigrants to be enforced soon. Apparently, information packs explaining British customs and containing advice on social rules such as ‘not littering, not spitting and queuing in shops’ are also to be given to new migrants. Such rules cannot be faulted as long as they don’t morph into a very restrictive visa regime that unduly straitjackets the movement of qualified workers from other countries. As happened a couple of years ago when the British government suddenly made it mandatory for doctors coming to Britain from outside the European Union to acquire permits not just to work, but also to train there. This forced HSMP migrants to re-qualify and introduced new tests, including earnings requirements and academic qualifications. We had criticised the move in these columns since it meant abolishing the Department of Health’s system of allowing doctors from abroad to seek permit-free National Health Scheme training jobs in Britain. This would have denied Indian and other non-EU doctors their jobs even after they qualified in the tests.
TECHNOLOGY HELPING POOR
February 20th, 2008 krishna The 11th National Conference on e-Governance commenced at Panchkula with a call to policymakers and professionals to ensure that benefits of Information and Communication Technologies touch the lives of the poor and empower them. Wire money online to India with Xoom.com for as low as $4.99. Addressing the gathering, Haryana Governor Dr A.R. Kidwai, who presided over the inaugural session, said India was the nursery for some of the brightest ICT technologists and scientists, but it also had the largest number of poor in the world at the same time. “No technological advance can be truly complemented if it doesn’t touch the lives of these people. It is this challenge that the industry, academia, civil society and the government agencies will have to keep in mind when they chart the future ICT policy for India,” he said in a concise speech. Dr Kidwai said the ICT revolution bypassing the poor had both economic and social costs as the gap between the haves and have-nots would increase in economic terms if benefits from ICT did not percolate. “The benefits would reach the poor only when they are given access to technology and its use. The technology should be rooted in the existing cultural and social milieu,” he said. The Department of Administrative Reforms and Public Grievances, Department of Information Technology of Government of India and Department of Information Technology of Haryana are organising the conference jointly: Union Minister of Communication and Information Technology A. Raja, who delivered the inaugural address, also said that the success of e-governance initiatives would be judged mainly by the benefits it brought to the common man. “We must design systems that go beyond small pilots – to achieve speed, certainty and consistently high quality in the delivery of services – along with comprehensive geographical coverage,” he added. The Minister said that modernising government was about more transparency, user-centricity and inclusiveness. “It was also about responsiveness, removing the complexity of government and liberating citizens to use their talents and skills in an ever-changing and increasingly competitive world,” he said. He also appreciated the State Wide Area Network (SWAN) launched in Haryana two days ago. Describing the National e-Governance Plan adopted by the Central government as a major policy initiative having the potential to transform the socio-economic landscape of rural India, he said setting up of one lakh Common Services Centres in six lakh villages [...]
