Miscellaneous - This Day That Age   

dated June 13, 1957: Levy of expenditure tax

The total number of persons, individuals and families, affected by the expenditure tax, announced by the Finance Minister in his Budget proposals, is not likely to exceed 6,000, according to an official press release. It says persons who spend less than Rs.24,000 a year are not affected by this tax in any circumstance. The principle of the expenditure tax is that on one's own personal consumption, a person should be allowed to incur tax-free a certain prescribed amount of expenditure based on the size of his family. If, however, he spends more than the prescribed amount on his personal consumption, he should pay tax on the excess amount spent. Expenditure for purposes of this tax does not include savings or investments. The prescribed amount has been fixed at a high figure so that persons who spend less than Rs.24,000 a year are not affected by the tax. The object of the tax being to put a check on excessive personal expenditure and to encourage savings, the source from which the expenditure is made is immaterial. The tax comes into operation whether the expenditure is from income or from capital or from any other source. The expenditure tax applies not to companies but only to individuals and Hindu undivided families whose total taxable income is more than Rs.60,000. The number of such persons and families to-day is about 5,500. After taking into account any marginal cases, the total number affected by this tax is not likely to exceed 6,000.

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