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Budget for undivided families: Here are a few secular ways to foster family ties via tax sops

The domestic violence law is an adversarial legal regime unwittingly pitting family members against each other in its avowed aim to protect women. But then it is necessary given the history of violence perpetrated against women although critics especially men have been saying that the law should be gender neutral because it is not uncommon for men to be at the receiving end. Be that as it may, what we need is a simultaneous regime that fosters family harmony. And the two regimes would not be working at cross purposes. If anything it would have the effect of endearing a wife to her husband and vice versa and thus serve to lessen filial hostilities and violence.

In a previous article in these columns, I had canvassed for Finance Minister Arun Jaitley taking a leaf out of the US Federal income tax law---granting a substantial tax relief to husband and wives filing joint income tax returns, in his forthcoming Budget. That could indeed be the major plank of reorienting our personal taxation into family taxation which once again would be a perfect fit with Indian realities. Double income families must be encouraged. What best can be the encouragement than the substantial reduction in tax liability for the couple leaving them with a higher disposable income! Clubbing of income has been mandated under certain circumstances where a person is trying to reduce his tax liability by splitting his income so as to frustrate his aim and get more tax from him. The Finance Minister ought to reward couple who do not resort to such devious stratagems but work hard and contribute to GDP.

Representational image. AFP

Representational image. AFP

Public sector banks can start the practice of giving higher interest to joint accounts held by husbands and their wives on the condition that they forswear individual accounts. Indeed, joint bank accounts and joint returns must be incidental and corollary to the healthy practice of couples owning their properties jointly. Stamp duty could be reduced significantly in favor of properties registered in the joint names of married couples.

Togetherness is the hallmark of family, and our laws should do their bit to promote the idea through financial incentives. Family allowance granted in many jurisdictions including Malaysia incorporate the principle of number of mouths fed. It recognizes the reality that a carefree bachelor with no one to be taken care of by him ought to be taxed more than a family man weighed down by family responsibilities of taking care of say a wife and three children as well as ageing parents. It would be churlish to resent this favor on the ground that it would put a perverse premium on large families when the accent is on family planning with one child touted as the best. Welfare state presupposes sympathetic worldview of families. People who have come into the world must not be viewed as a burden.

As it is, family figures on the radar of the taxman only tangentially---for granting exemptions to health and life insurance premiums on children and spouse. Of course it figures more substantially when Hindu Undivided Family (HUFs) are recognized. HUF as a taxable unit has come in for criticism though from minorities as well as secularists on the ground that it gives latitude to Hindus to manipulate or arrange their tax affairs so as to minimize their tax liabilities. Of course, HUF was not born of parochial considerations but as a result of the hoary practice of family properties devolving from generation to generation as opposed to individual properties that can be willed away to anyone the testator pleased. HUF has been conducive to togetherness though a cynical view has also been that it has had the effect of encouraging idlers. Be that as it may, the point is if the Finance Minister gives allowances and tax breaks uniformly or secularly irrespective of the religion or caste one belongs to, the tirade and fulminations against HUF might perhaps stop.

The government had given subtle hints of rewards in store for the tribulations people cheerfully put up with during in the heady months of November and December 2016 when demonetization shook the nation like nothing else before. Let fostering family harmony be that reward.

For full coverage of Union Budget 2017, click here


Updated Date: Jan 19, 2017 10:54 AM

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