✌✌✌✌ THE HINDU ✌✌✌✌
✌✌ Passport to reform ✌✌
The progressive changes introduced by the Centre to the rules governing grant of passports were long overdue. They simplify, in great measure, the paperwork needed for an Indian citizen to get the document. In order to screen applications to prevent impersonation, some of the earlier rules may have made sense at some point of time, but over the years the bureaucratic impediments that the cumbersome requirements posed to genuine applicants were so severe that many had to knock on the doors of high courts for remedy. Some rules were targeted at women. The most specious form of harassment of women passport applicants related to those who were either separated or divorced. Even something as routine as renewing a passport without any change of name or detail or getting a passport in the name of a child was a laborious process, as passport officials insisted on either the father’s consent or demanded a divorce decree. Following the recommendations of an inter-ministerial committee comprising officials of the Ministries of External Affairs and Women and Child Development, crucial changes have been introduced. The application form now requires only the name of one parent, not both. This will enable single parents to apply for passports for their children without the name of either the father or the mother being printed in the document. The stipulation that marriage certifications and divorce decrees should be provided has been removed; the obsolete concept of getting documents attested by notaries or magistrates has also been jettisoned, and self-declarations on plain paper would now be accepted.
A key reform is that a birth certificate is no more the main proof of date of birth, and other official documents, including Aadhaar number and PAN card, which contain the date, can be utilised. In the case of orphaned children, actual proof for date of birth has been dispensed with and a declaration from the head of a child care home or orphanage confirming the date is enough. In keeping with the times, adopted and surrogate children can be issued passports even in the absence of the relevant documents, based on a declaration on plain paper. Sadhus and sanyasins have been allowed to mention their gurus in lieu of the names of their parents. The new rules address many irritants in the process of getting a passport, but also make one wonder why these were not introduced long ago. Ultimately, a passport ought to be every citizen’s right. Simplifying the procedures in obtaining one should be an ongoing exercise.
✌✌ Behind Pakistan’s CPEC offer ✌✌
Days after a senior Pakistani General suggested that India should shun its “enmity” with Pakistan and join the $46 billion China-Pakistan Economic Corridor project, the Chinese foreign ministry has called the offer a “goodwill gesture”, exhorting India to take it up. At face value, the suggestion is odd. India has no dialogue with Pakistan at present, and has opposed the project, bilaterally with China “at the highest level” as well as at the UN. Relations with China have deteriorated considerably since President Xi Jinping’s visit to Pakistan to announce the project in April 2015. Initially, New Delhi sought to play down its significance, as it was made just weeks before Prime Minister Narendra Modi travelled to China, and the government would have hoped to dissuade Beijing from pushing the more objectionable projects that run through disputed territory. However, not only has the corridor taken shape rapidly, China and Pakistan have been drawn into a closer embrace, with Pakistan investing considerable resources in securing Chinese officials working on CPEC, and China redrawing its plans for the One Belt One Road to Central Asia to incorporate Pakistan’s interests. China has defended Pakistan against India’s efforts to pin it down with regard to support to terror groups, and to draw an obstructionist equivalence with India’s Nuclear Suppliers Group membership application. Given all this, the General’s suggestion can only be understood to have been made rhetorically, especially as it was accompanied by allegations of India’s “anti-Pakistan activities and subversion” in Balochistan.
While there can be little expectation of any room for India in CPEC at present, there is space for India to step back and see where China and Pakistan want to go with it. The offer to India was made along with offers to other “neighbouring countries”. Already, Iran wants Gwadar to be a “sister” port to Chabahar, and Turkmenistan and other Central Asian republics have shown interest in the warm-water port that will be a nodal point for goods through Pakistan to the Chinese city of Kashgar. Further north, despite its problems on terror from Pakistan, Afghanistan is becoming a nodal point for China’s connectivity projects to Iran. The meeting among Russian, Chinese and Pakistani officials on Afghanistan this week, and Russian engagement with the Taliban, indicate much more is changing in the region than just the alignment of highways and tunnels. While India has done well to shore up relations with others in the region, it cannot afford to be blindsided by their involvement with the OBOR project and Chinese plans. CPEC is no longer a project in Pakistan, but one that runs through it, a project that will link 64 countries.
✌✌✌✌ THE ECONOMIC TIMES ✌✌✌✌
✌✌ Tax dividends in the shareholders’ hands ✌✌
Taxation of dividends has become a vexatious issue, needlessly. It should be taxed in the hands of the investor at the rate applicable to the investor’s income bracket. The finance minister has indicated that the rate would be lowered in the interest of economic efficiency and that is welcome. The dividend distribution tax should be scrapped. To make sure that dividend income does not go under-reported, companies can be mandated to deduct tax at source at the highest marginal rate of 30%, leaving it to individuals whose incomes warrant a lower rate of tax to claim a refund while filing returns. The government has to make the processing of claims and refunds fast and efficient, that is all.
At present, companies pay a dividend distribution tax at the rate of 15%. Individuals who receive dividend income in excess of .`10 lakh pay a dividend tax of 10%. So dividends bear a tax of 25% at most. This is not an equitable way of taxing people. Company promoters who get the bulk of their income as dividends pay a lower proportion of their income as tax as compared to employees who receive the bulk of their income as salaries taxable at the highest marginal rate. Taxing dividends in the hands of the shareholder would both be fairer and more revenue-efficient than the current arrangement.
The debate that should begin on taxing dividends is whether to allow the cost of equity capital the same deductible expense status as interest, the cost of debt capital. This would do away with artificial demand for debt — borrowing is tax-efficient, even if you do not really need that loan — and encourage companies to retain only as much earnings as they have use for. Uninvested cash surpluses on company books are a drag on the economy. This, of course, is a global debate.
✌✌ Passport to reform ✌✌
The progressive changes introduced by the Centre to the rules governing grant of passports were long overdue. They simplify, in great measure, the paperwork needed for an Indian citizen to get the document. In order to screen applications to prevent impersonation, some of the earlier rules may have made sense at some point of time, but over the years the bureaucratic impediments that the cumbersome requirements posed to genuine applicants were so severe that many had to knock on the doors of high courts for remedy. Some rules were targeted at women. The most specious form of harassment of women passport applicants related to those who were either separated or divorced. Even something as routine as renewing a passport without any change of name or detail or getting a passport in the name of a child was a laborious process, as passport officials insisted on either the father’s consent or demanded a divorce decree. Following the recommendations of an inter-ministerial committee comprising officials of the Ministries of External Affairs and Women and Child Development, crucial changes have been introduced. The application form now requires only the name of one parent, not both. This will enable single parents to apply for passports for their children without the name of either the father or the mother being printed in the document. The stipulation that marriage certifications and divorce decrees should be provided has been removed; the obsolete concept of getting documents attested by notaries or magistrates has also been jettisoned, and self-declarations on plain paper would now be accepted.
A key reform is that a birth certificate is no more the main proof of date of birth, and other official documents, including Aadhaar number and PAN card, which contain the date, can be utilised. In the case of orphaned children, actual proof for date of birth has been dispensed with and a declaration from the head of a child care home or orphanage confirming the date is enough. In keeping with the times, adopted and surrogate children can be issued passports even in the absence of the relevant documents, based on a declaration on plain paper. Sadhus and sanyasins have been allowed to mention their gurus in lieu of the names of their parents. The new rules address many irritants in the process of getting a passport, but also make one wonder why these were not introduced long ago. Ultimately, a passport ought to be every citizen’s right. Simplifying the procedures in obtaining one should be an ongoing exercise.
✌✌ Behind Pakistan’s CPEC offer ✌✌
Days after a senior Pakistani General suggested that India should shun its “enmity” with Pakistan and join the $46 billion China-Pakistan Economic Corridor project, the Chinese foreign ministry has called the offer a “goodwill gesture”, exhorting India to take it up. At face value, the suggestion is odd. India has no dialogue with Pakistan at present, and has opposed the project, bilaterally with China “at the highest level” as well as at the UN. Relations with China have deteriorated considerably since President Xi Jinping’s visit to Pakistan to announce the project in April 2015. Initially, New Delhi sought to play down its significance, as it was made just weeks before Prime Minister Narendra Modi travelled to China, and the government would have hoped to dissuade Beijing from pushing the more objectionable projects that run through disputed territory. However, not only has the corridor taken shape rapidly, China and Pakistan have been drawn into a closer embrace, with Pakistan investing considerable resources in securing Chinese officials working on CPEC, and China redrawing its plans for the One Belt One Road to Central Asia to incorporate Pakistan’s interests. China has defended Pakistan against India’s efforts to pin it down with regard to support to terror groups, and to draw an obstructionist equivalence with India’s Nuclear Suppliers Group membership application. Given all this, the General’s suggestion can only be understood to have been made rhetorically, especially as it was accompanied by allegations of India’s “anti-Pakistan activities and subversion” in Balochistan.
While there can be little expectation of any room for India in CPEC at present, there is space for India to step back and see where China and Pakistan want to go with it. The offer to India was made along with offers to other “neighbouring countries”. Already, Iran wants Gwadar to be a “sister” port to Chabahar, and Turkmenistan and other Central Asian republics have shown interest in the warm-water port that will be a nodal point for goods through Pakistan to the Chinese city of Kashgar. Further north, despite its problems on terror from Pakistan, Afghanistan is becoming a nodal point for China’s connectivity projects to Iran. The meeting among Russian, Chinese and Pakistani officials on Afghanistan this week, and Russian engagement with the Taliban, indicate much more is changing in the region than just the alignment of highways and tunnels. While India has done well to shore up relations with others in the region, it cannot afford to be blindsided by their involvement with the OBOR project and Chinese plans. CPEC is no longer a project in Pakistan, but one that runs through it, a project that will link 64 countries.
✌✌✌✌ THE ECONOMIC TIMES ✌✌✌✌
✌✌ Tax dividends in the shareholders’ hands ✌✌
Taxation of dividends has become a vexatious issue, needlessly. It should be taxed in the hands of the investor at the rate applicable to the investor’s income bracket. The finance minister has indicated that the rate would be lowered in the interest of economic efficiency and that is welcome. The dividend distribution tax should be scrapped. To make sure that dividend income does not go under-reported, companies can be mandated to deduct tax at source at the highest marginal rate of 30%, leaving it to individuals whose incomes warrant a lower rate of tax to claim a refund while filing returns. The government has to make the processing of claims and refunds fast and efficient, that is all.
At present, companies pay a dividend distribution tax at the rate of 15%. Individuals who receive dividend income in excess of .`10 lakh pay a dividend tax of 10%. So dividends bear a tax of 25% at most. This is not an equitable way of taxing people. Company promoters who get the bulk of their income as dividends pay a lower proportion of their income as tax as compared to employees who receive the bulk of their income as salaries taxable at the highest marginal rate. Taxing dividends in the hands of the shareholder would both be fairer and more revenue-efficient than the current arrangement.
The debate that should begin on taxing dividends is whether to allow the cost of equity capital the same deductible expense status as interest, the cost of debt capital. This would do away with artificial demand for debt — borrowing is tax-efficient, even if you do not really need that loan — and encourage companies to retain only as much earnings as they have use for. Uninvested cash surpluses on company books are a drag on the economy. This, of course, is a global debate.
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