(3) In view of our commitment to reduce the inequalities of income and wealth, whether in the rural areas or in the urban areas, I had stated in my Budget Speech that ultimately the basis of tax has to be the size of income or wealth irrespective of whether it is derived from agricultural or nonagricultural sources. Several Members were critical of the fact that the new rich class in the rural areas has been left out of the ambit of taxation. There was also a legitimate concern about the evasion of taxes which is taking place as a result of incomes derived from urban sources being shown as rural incomes. I agree that these matters would require very careful consideration and with this end in view, I had stated in my Budget Speech that these and other related matters would be discussed with the State Governments.
(4) The new provision relating to the wealth tax impose a virtual ceiling on holding of wealth to a much lower level than hitherto and take us much nearer to our objective of imposing a ceiling on urban property
(5) The work of recovery of arrears of estate duty is being transferred from the State Governments to the Income-tax-Department at the Centre.
(6) The valuation Cell located in the Central Board of Direct Taxes is being further strengthened.
(7) A committee is being appointed to review the self assessment procedure scheme with a view to suggesting improvement which could reduce leakage of revenue.
(8) A comprehensive review of the Foreign Exchange Regulation Act has been undertaken and an amending Bill for the purpose is being introduced in the Parliament during the current session.
(9) To effectively contract the leakage of foreign exchange through under- invoicing and over-invoicing and other manipulations, a committee was set up and its recommendations which have just been received, are under active consideration of the Government.
(10) To discourage payment of high salaries and remunerations which are hardly in consonance with the norms of egalitarian society, a ceiling has been put on the remuneration of company employees which would be deductible in the calculation of taxable profits. Together with the existing ceiling of Rs.1000/- per month in the case of perquisites, the allowable overall ceiling on remuneration and perquisites for purposes of taxation will be at Rs.6000/ - per month.
(11) To tighten the incidence of the wealth-tax, the existing provision in the Act excluding from aggregation the assets transferred by an individual to the spouse or minor children is done away with. A similar provision is being made in respect of conversion of assets of individuals into those of Hindu undivided families.
