Rs 1.4 cr and going: Controversy over Modi suit is baseless but PM should pay tax on it

The unseemly controversy over Prime Minister Modi’s suit gotten from an ardent aficionado as gift misses the larger issue – don’t look the gift horse in its mouth. The government rules mandate public servants to makeover to the governmental treasury gifts received in excess of Rs 5,000. In the first place, the one receiving the gift is not always an expert valuer though conscientious ones may call in the official valuer pronto out of abundant caution even if there is a slightest doubt that the gift received could breach this value. Modi could at best be held guilty of not calling in the valuers but this technical fault pales before his track record of good work done by him earlier as Gujarat Chief Minister and now as India’s Prime Minister in auctioning the gifts for noble causes. If Modi has been guilty of arrogating to himself the power to auction, why wasn’t he halted in the tracks when he was following the same practice as Gujarat Chief Minister? [caption id=“attachment_2105693” align=“alignleft” width=“380”]  AFP[/caption] The truth is taking away of the gifts received after paying the difference between its value and Rs 5000 begets nothing substantial or tangible for the nation whereas auctioning them transparently serves to help noble causes like educating the girl child and cleansing of Ganges. The allegation that the former prime minister Manmohan Singh took away an expensive foreign watch worth Rs 4 lakh by getting it valued for Rs 35,000 may or may not be true but the fact is the practice does lend itself to opacity and mutual backscratching tendencies especially given the distinct possibility people at high places can easily bring to bear their tremendous power and clout to silence lowly valuers especially the pliable ones. What Modi has done is to discard the opaque system though one could say he should have resorted to the auction mode after amending the rules. The highest bid so far for the suit at the auction is Rs 1.41  crore. It is likely that by 20 February, when the hammer is struck, the highest bid may far be in excess of this figure. Whether it goes up or not is not the issue. The issue is the tidy amount thus mobilized can go some way in cleansing Ganges. Cynics sneer that this is too small an amount whereas the sum required is gargantuan. May be. But you build such amounts only in large trickles. Modi’s lead may motivate and even shame philanthropists whose tribe in India is not very large and most of whom give donations with strings attached. There is also a cynical view that Modi converted the gift from ex officio to personal the moment he got it stitched and wore the suit in full public view. In order to silence his critics, he must pay up income tax on the value of the gift. To be sure, the income tax law spares gifts received as cloth or garments from the purview of tax even while targeting gifts in kind such as shares, gold etc. It also exempts such gifts up to Rs 50,000. But Modi would do well to go beyond the straightjacket of the law and include the value of the cloth in his income and pay up tax thereon though he is not obliged to do so more as a penance for not going strictly by the rule book. Naomi the charitable trust that would be using the proceeds of the auction for cleansing Ganga would in any case by exempt from tax including on gift.