Tax Changes In India
Impacts On Nepalese Taxation

By Rup Khadka

THE INDIAN Union Finance Minister Mr. Yashwant Sinha presented 2001/02 Budget to the parliament on February 28,2001. The need for growth in revenues, simplification and nationalisation of the tax regime, and effective tax compliance through measures, which are friendly for the honest taxpayers and a deterrent to the evader have been reported as guiding principles behind the formulation of tax proposals of this budget. The main tax changes are outlined below.

In 2001/01 central values added tax (CENVAT) is levied at 16 per cent. In addition, special excise duties of 8 per cent, 16 per cent and 24 per cent are levied on some selected items. In 2001/02, the rate of special excise duties will be fixed at 16 per cent in place of three different rates. This means that most of the items will be subject to 16 per cent CENVAT while a few others will also be subject to an additional special excise duty of 16 per cent making a total duty of 32 per cent. The idea is to convert the central excise duty into a VAT.

In India, sales tax is levied by the state governments, which are making detailed preparations for the conservation of their sales tax systems into VAT in 2002.

In 2001/02, service tax will be extended to several services, including port services, broadcasting services, photographic services, convention services, sound recording services, scientific and technical consulting services, communication services, and video tape production services.

India has been liberalising its customs duties since the early 1990s. In this connection, both the level and number of customs have been reduced dramatically. In 2000/01, rates of import duties are fixed at 5,15,25, and 35 per cent with a few exceptions. In addition, there is a surchage of 10 per cent leading to a pick rate of 38.5 per cent. The surcharge of 10 per cent will be abolished in 2001/02, meaning that the pick rate will come down from 38.5 per cent 35 per cent.

In 2001/02, customs duties will be reduced on IT and telecom products and their inputs and components, textile machine, silk waste, cotton waste, flax fiber, gold, etc while import duties will be increased on some agriculture products such as tea, coffee, copra, coconut etc. Some items, which are exempt from the customs duties in 2000/01, will be brought into the customs’ net in 2001/02.

There is a policy to bring down the level of import duties to East Asian Levels. To this end, the maximum rate of import duties will be set at 20 per cent in the coming three years.

Countervailing duties on the imported consumer goods will be levied on the basis of maximum retail price as their domestic counterparts that are subject to the central excise duties.

In 2000/01, a surcharge is levied at 10 per cent on corporate taxpayers and 15 per cent non-corporate taxpayers. In addition, a surchage of 1 per cent is levied on corporation toward the National Calamity Contigency Fund and a surcharge of 2 per cent is levied on all taxpayers for the Gujarat Earthquake relief. In 2001/02, all these surcharges will be abolished except a surcharge of 2 per cent for relief to quake hit areas of Gujarat.

The rate of tax on cooperative societies will be reduced from 35 per cent to 30 per cent. Similarly, the tax payable on the distribution of dividend of domestic companies will be reduced from 20 per cent to 10 per cent Rules relating to expense deductions and depreciation will be liberalised.

Also proposals have been made for the simplification of tax laws and procedures.

Since India is the largest trading partner of Nepal and big neighbour with long open border tax changes in India are also a matter of great concern for Nepal. In a globalised context, it becomes necessary to adjust tax system of any country with the tax system of its trading partners. The Nepalese economy has both formal and informal sectors. The formal sector is in the tax net while the informal sector is outside the tax net. Less than one third of economy is believed to be under the tax net while the corresponding figure may be around 80 per cent in the developed world. It must be noted that while a 10 per cent tax GDP ratio is a low level of tax effort for the country, in fact the modern sector may be paying about 30 per cent of the total income or value added it creates in taxes. This means the burden of taxation on the formal sector might be nearly as large as in the developed country.

The informal sector may engage in activities that are in direct competition to the formal sector. For example, radios, watches, textiles etc. that are smuggled across the borders and sold tax free will compete with those that are imported/domestically produced and sold subject to various taxes. The direct competition by the untaxed informal sector will force the modern taxed sector to begin to evade taxation in order to survive financially when the tax burden is too high on the formal sector. The traditional and complex tax procedures will make matter only worse.

This indicates the need to create a policy environment where the formal sector is not penalised and the informal sector does not become more attractive. For this, it is necessary to adopt various measures such as follows:

Attempts must be made to moblise additional revenue by broadening the tax base, but not squeezing the taxpayers that are already paying high taxes. Tax base can be broadened legally by abolishing exemptions or special facilities provided to a particular sector or group and extending taxes to all potential sectors where it is administratively feasible. Similarly, tax base also can be broadened administratively through an effectively enforcement of the tax laws. It is also necessary to reduce the rates of customs duties and income tax, avoid any kind of double taxation, liberalise expense deduction and depreciation rules, extend loss carry forward period and simplify procedures relating to all taxes.

The tax administration needs to be part of the modern sector that maintains accounts and pays the bulk of the tax revenues. It must launch an extensive tax education programme to educate taxpayers on their responsibilities. Tax administration should be friendly and service minded to the payers of various taxes and tough to those who try to carry out under ground activities in order to evade taxes.

Breaking Of Buddha Statues

By Prakash Dahal

THE Talibans ruling Afghanistan pulled down Bamiyan Buddha. They informed the world before razing down the two statues (58 meters and 38 meters). The world witnessed the act helplessly. All they could do was to decry it. Their words didn’t go down the ears of Talibans. The Talibans didn’t heed, they went ahead with the nefarious act.

The Talibans, it seemed, determined to eliminate anything that was reminiscent of Buddha in their soil. They struggled off international condemination. And, they did what they wanted with impunity. Neither the UN agency, UNESCO working for the preservation of the world’s religious and cultural heritage, nor the global cop, the US, could check the fundamentalist militia from tearing apart the Bamiyan Buddhas. Neither the economic superpower Japan nor mighty China could persuade them against wrecking the 13th century statues of the apostle of peace.

Why?

The intransigence of Taliban militia despite the spilling of so much of concern over their fringe brings forth several questions. Can any military dictator fundamentalist group, or religious zealots, turn deaf ear to the world appeal and still get away with their crimes committed against humanity, peace and world’s prosperity? Can a group of fundamentalist militia, ambitious dictators, holding a nation to ransom, commit any crime against humanity, peace and the world heritage within the land and the world community can only sabre-rattle?

The answer is certainly ‘No’. No dictators, tyrants or fundamentalist militia, have got away with such crime, in retrospect. Right from Manual Noriega to Saddam Hussain, everyone has been made to pay for the ‘mistakes’ they made. If the noose can be hung around their neck, why can’t the same be done to the Taliban?

By wrecking the statues of Lord Buddha, the Talibans, in fact, have tried to trample peace under the boosts of religious intolerance and abscurantist ideologies. The underlying message that the razing of Buddha statues carried to the world community is that the Talibans want peace of their kind and in their terms and not the one that Buddha preached. In other words, they do not believe in peace through a non-violent means, but an uneasy peace that is forced upon at gun points.

The Talibans told the world that they were not committing any crime as they were only "breaking stones". Had they been only inert rocks, the Talibans wouldn’t have torn them apart. They brutalised the sculpture because the stones belied the faith of millions from across the world. And, they wanted to crush the very faith by rolling bulldozer on it.

Prevailing peace on earth supposed-to-be the ultimate goal of the world ridden with violence, bloodshed, carnage and killings. If that is what the whole world is struggling for, then Talibans stand as great enemy at the threshold of peace.

The logic is simple. If harmless statues of the great proponent of peace, Buddha, can become the cruel target of Taliban militia in Afghanistan, the peace and the world leaders talk about become an elusive phenomenon, or only the rhetoric being shed by demogagues.

They talk peace in the face of violence. Do they mean what they say? If they mean what they say, and if the whole world is really seeking peace, then the people like Mulla Mohammed Omar, should find no place on earth to breathe threat to peace. Unfortunately, the likes of Mulla Mohammed Omar are plenty there to trigger unrest. They are there to infuse violence in religion and unleash militants to cut throat of those who defy them.

Mulla Mohammed Omar’s edict didn’t come out of the blue. The cleric had been warning to wreck the Bamiyan Buddha since 1977. However, Mulla Mohammed Omar couldn’t dare to incure the displeasure of the whole world earlier. Nevertheless, the cleric had not abandoned his vicious design to get rid of the 700 years old tallest Buddhist sculptures.

How could he do it now? Not that Talibans don’t realise it that they can’t survive if they are expelled from the world community, or if the world community isolate it both political and economically.

Afghanistan has already been ravaged by the spate of violence and unrest due to civil strife over the past few years. The country is terribly devasted and plagued by hunger and disease. Its people are fleeing in large numbers to seek refuge from hunger, death and disease.

How can a country which is mired deep in troubles risk to infuriate the world community whose cooperation it desperately needs to address its problems? Above all, the Taliban militia which spelled threat in the past too, to wreck the Bamiyan Buddha, did it this time. why couldn’t they do it then and how could they do it now? Is it because they could feel the pulse of the world community and found no reason to fear the global isolation? Or, is it because they had the tacit approval of some power behind which maliciously wanted them to stir the hornet’s nest and fish in troubled waters.

What the world community, set for restoring peace in this violence ridden world, needs to do is to unmask the power that prodded the Taliban militia to destroy the Bamiyan Buddhas and expose it to the world.

The world community, at the same time see to it that the rogue Taliban rulers pay for the crime they committed.

Because, the gravity of the attack on Buddha sculpture, if not fathomed now, might go in boosting the confidence of the enemy of peace and the world, once again, fall into the cauldron of killings and carnage.

What the world community may need to understand that the attack on Buddha statues is a symbolic attack on peace and its advocates. And, if the violent criminals win, peace will become an illusion.

It’s A Hopeless Hope

NU

WHEN one is in deep difficulty and is drowned in abject adversity and lost in the maze of unending deluge of sorrows, the only thing remains with him/her is hope. Hope is the most natural entity that a mortal being aspires to revel in time of crisis. With the dawn of consciousness men, began cherishing hope till the last breath of their life even though the life’s whole path is littered with past and present ruins.

When the curious mortal opened the Pandora’s Box, all the sufferings deluged the life. But glued at the bottom of the box was Hope. The lesser mortals like us live with the sorrow, pain and unrequited wishes However, men’s cup of life has another ingredient—joy- for which men crave for whole of his life. They hope that one day all his dreams are realised and life will be full of bliss.

Hope is a panacea for all ills that men undergo. It is the health for sick, the wealth for the poor, victory for the losers and freedom for captives. To hope is also to escape from dark realities of life. Some hope for women, wealth and wine, some hope for good life, and some hope for ennobling acts of making other happy by reducing their sufferings and pains.

A man’s whole life is a struggle to relieve pains by attempting to attain the unattainable. His desire for joys, happiness and good life never ceases. Longings are bubbles in water. As soon as one bubble bursts, another pops up.

His longings, more often than not, turn into deceptive mirage, which invariably turns him into a bundle of sorrow. Men’s expectations ride the wildly beating wings of Hope.

Alexander Pope, the great Victorian poet-satirist criticised whole human race for its inability to achieve the redemption from hoping-"Hope springs eternal is human breast man is never but always to be blest."

The common men are in habit of living on dreams. Hope is the most natural way that induces men to live one’s life in dreams. These dreams when unfulfilled bring many agonies. In the Mahabharat, Lord Krishna told Arjuna that he should not hope for the better result. Rather he should only act without thinking or hoping about the good results. Arjuna’s hope for better result could have put this great archer into suffering because in the Mahabharat’s war millions of people including his relatives perished. Stopping Arjuna to think or hope for results is the Lord’s way to alleviate pains of his distinguished disciple. "Have no hope in order to have no disappointment," is the
famous adage that refers to the men’s all sorrows which have their sources in men’s relentless wishes for future fortunes.

But men have proved to be mere hopeless creature in many of their habits despite the detrimental effects of unrequited hopes coming mostly from his love for hoping against hope for future happiness. They never forget to pin their hopes that future will be happier, more fruitful and mirthful than the past and present. They never take rest from dragging life on dreams even though he is acquainted of the fact that their pains of hoping for better future during whole of their lives are dashed by the cold icy death that wraps him up in the form of deep sleep. No other than the Bard-of-Avon himself has reminded mankind of this very fact — "We are such stuff as dreams are made on our little life is rounded with sleep."

But there are some who feel that hopes unrealised in this earth is better than all hopes realised. Those who believe in life after death and God’s Kingdom say that if all your dreams are realised here the earth will be turn into heaven and the real heaven will be devoid of bliss and enjoyments. "Have some joy to die with," said Poet Robert Browning.

Whether we die with our hope realised or unrealised, one thing is sure: Hope does alleviate our sufferings. It is as helpful to all human race as John Keats’ Warm South that succored the Consumption stricken poet " fade far away, dissolve and quite forget the weariness, fever and fret of the world where palsy shakes few and youth grow pale…"