MANY OF THE ‘MIDDLCE CLASS’ INDIANS HAVE THE HABIT OF SAVINGS TO MEET THEIR, SUCCESSORS’ FUTURE NEEDS, SINCE WE ARE LIVING UNDER UNSECURE FUTURE CIRCUMSTANCES.
THEY WOULD LIKE TO KEEP THEIR SAVINGS IN LIQUID FORM OF CASH, RISK FREE DEPOSITS WITH POSTAL DEPARTMENT, BANKS, FINANCIAL INSITUTIONS SO THAT THEY CAN MEET THEIR NEEDS ON TIME WITHOUT ANY LOSS OF TIME, HASTLE. THE INSITUTIONS ACCEPT DEPOSITS WILL USE THESE FUNDS FOR LENDING AND EARN INCOME THEREON. HENCE THESE FUNDS BECOMES SOURCE FOR NATIONAL ECONOMIC DEVELOPMENT, SOCIAL WELFARE NEEDS. THE INSTITUTIONS WILL GIVE SOME INTEREST TO SUCH DEPOSITORS. MANY SITUATIONS THE RATE OF INTEREST WILL BE LESS THAN EFFECTIVE RATE OF 8 % P.A.
REASON FOR INCOME TAX EXEMPTION:
- RATE OF INTEREST IS NEAR TO RATE OF INFLATION. IT MEANS IT IS TAXING THE INFLATIONARY, ARTIFICIAL INCOME.
- TO ENCOURAGE SAVINGS WHICH IS MAIN SOURCE FOR LENDING FOR NATIONAL ECONOMIC DEVELOPMENT, TO MEET SOCIAL WELFARE NEEDS.
- TO DISCOURAGE SPENDING AND TO ENCOURAGE TO CONVEDRT SAVINGS AS DEPOSITS WITH POSTAL DEPARTDMENT, OTHER FINANCIAL INSTITUTIONS.
- TO ENCOURAGE SELF SECURITY FOR THEIR NEEDS.
- NOT TO DEPEND ON GOVERNMENT FOR THEIR SOCIAL SECURITY FOR THEIR IMMEDIATE, UN EXPECTDED AND FUTURE NEEDS.
- TO USE IDLE FUNDS MORE EFFECTIVELY WITHOUT LOSS OF TAX REVENUE TO THE GOVERNMENT.
ALTERNATIVELY WHAT CAN BE DONE?:
- THE FIXED RATDE OF TAX CAN BE COLLECTED FROM THE INTEREST PAYER AS ‘INTEREST PAYMENT TAX’, LIKE ‘DIVIDEND DISTIBUTION TAX’.
- TO ISSUE TAX FREE BONDS, DEPOSITS FOR LONG TERM, SHORT TERM PERIODS.
- TO DIVERT TAX FREE DEPOSITS FOR LONG TERM NEEDS OF INFRASTRUCTURE PROJECTS, RAILWAYS, POWER, HIGH WAYS, SKILL DEVELOPMENT, AGRICULTURE MECHANISASTION, STORAGE, PROCESSING.
K. HANMANDLO
09848071149
