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A huge amount of public money is being utilised in paying income taxes of cabinet ministers that accrue on their income. This scenario is present in various states of India. At a time when India is handling a problematic economic condition due to the pandemic, VVIP treatment to elected representatives continues to exploit the common man’s money.

By Shivanand Pandit

While addressing the people at the inauguration of the Kollam bypass in January 2019, the Prime Minister of India, Narendra Modi, mentioned that the culture of wasting public money should end. However, the reality is different. A huge amount of public money is being utilised in paying income tax of cabinet ministers that accrue on their income. This scenario is present in various states of India. The public of Andhra Pradesh and Telangana besides paying the salaries of their cabinet ministers, including the chief minister, also pay the tax that accrues on those salaries.

The chief minister of Telangana’s monthly salary is Rs 4,10,000 per month and his counterpart in Andhra Pradesh receives Rs 3,35,000 per month. Moreover, taxpayers also pay for their accommodation, convoys, and other perks. Respective departments of the two states have lately published a series of government mandates releasing sums of money for disbursement of the tax dues of these elected representatives for the financial year 2020-2021.

The income tax liability of Rs 7,14,924 was payable by the Chief Minister of Andhra Pradesh, YS Jagan Mohan Reddy, on the taxable income he got from the government during the fiscal year 2020-2021. On March 18, 2021, the general administration department published an order discharging the liability. The income tax liability of Rs 2,91,096 payable by Perni Venkataramaiah, the minister for information and public relations, was also paid off using public money.

Similarly, the government of Telangana is also liberal with the public’s money. On January 29, an order was issued by the department of agriculture to settle the income tax liability of Rs 87,984 payable by S Niranjan Reddy. On February 23, the department of health, medical, and family welfare sanctioned Rs 2,16,938 towards the income tax liability of health minister Eatala Rajender. On February 24, the industries and commerce department settled the income tax of Rs 1,66,670 payable by its minister, KT Rama Rao. According to the provisions of the Payment of Salaries and Pensions and Removal of Disqualification Act, 1953, of Andhra Pradesh and Telangana, the government should settle the tax liability on the incomes of ministers, including the chief minister. At the time of the introduction of this law, the salaries and rewards of elected legislatures were much more reasonable. However, over the decades, successive governments have increased the salaries of elected representatives through legislation. Every new government makes revisions of the salaries apart from paying perks and allowances.

In the year 2020, the government of Madhya Pradesh decided to pay income tax on the salaries of serving chief ministers and the council of ministers. The government took this decision regardless of being under substantial debt and observing its finances stressed by the deadly coronavirus epidemic. Due to the harsh economic influence of the Covid-19 lockdown, the Shivraj Singh Chouhan administration had previously stopped salary increases for all government employees. It had also suspended a share of the dearness allowance and arrears due from the Seventh Pay Commission. However, nothing changed for the ministers and they received a monthly salary of Rs 1,70,000, including allowances. Besides, the state has just released funds to pay their income tax ammounting to Rs 1.8 crore. The government released Rs 41.79 crore for their tours, hospitality, and travel needs and Rs 94.85 lakh towards the salaries and other expenses of former chief ministers. It has also raised its share in the Contributory Pension Fund Scheme for IAS, IPS, and IFS officers—from 10 percent to 14 percent. But the share has not been increased for government employees and continues at 10 percent. The Madhya Pradesh state treasure started shouldering the tax burden of all ministers, along with the parliamentary secretary, with retrospective effect from April 1, 1994. Now the opposition in the state which introduced the policy has opposed the scheme and termed it shameful. One of the Congress leaders mentioned that even pensioners pay their taxes but politicians who claim to do social service are not paying.

The story of Punjab is similar. The government of Punjab in August 2019, passed the bill to liberate the serving and opposition ministers from the responsibility of paying income tax on their perquisites such as residential bungalows. However, their salaries and other allowances will continue to be taxed. The Shiromani Akali Dal leader Bikram Majithia raised the flag against this and said that since the state was already in poor financial condition, the pressure of paying tax on the perks of the ministers should not be imposed on the government. The big anomaly is the chief minister’s tax liability on perks was higher than his salary. His annual salary was Rs 3 lakh but his income tax liability on perks had been pegged at Rs.17 lakh! According to the provisions of the East Punjab Ministers’ Salaries Act, 1947, the Punjab government had been paying taxes on salaries, allowances, and several perks of the ministers till its amendment in 2018.

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A few days before, in a nightmare development, an investigation exposed that several members of the legislative assemblies and legislative councils had been found evading their tax bills as the state has been disbursing their income taxes. The investigation exposed many names across party lines, such as the Congress, the Shiromani Akali Dal, and even the Aam Aadmi Party.

Then there is Uttarakhand. Even after 19 years of being carved out of Uttar Pradesh, Uttarakhand continued the practice of paying income tax liability of cabinet ministers from the state’s treasury. In 1981, the custom of the state exchequer paying the tax liability of the chief minister and as well as other ministers was started after the Uttar Pradesh Ministers (Salaries, Allowances, and Miscellaneous Provisions) Act came into effect. The justification given at the time was that these ministers were poor and cannot pay income tax from their small earnings.

The state of Uttarakhand has had many chief ministers like Nityanand Swami, Bhagat Singh Koshyari, Narayan Dutt Tiwari, BC Khanduri, Ramesh Pokhriyal Nishank, Vijay Bahuguna, Harish Rawat and Trivendra Singh Rawat and the government has been settling taxes for them. Remarkably, the ministers and MLAs in Uttarakhand get heavy salary packets. In 2018, the BJP government had also modified the salary packets of its ministers and MLAs. Approximately, the monthly salary of a minister is Rs 4.4 lakh while it is Rs 2.75 lakh for an MLA. However, in October 2019, the cabinet decided that from now onwards ministers will have to settle their tax obligation.

The story of Uttar Pradesh is no different. In 2019, the government of Uttar Pradesh decided to erase the almost 40-year-old tradition of the state exchequer settling the tax bills of its ministers. The tradition began in 1981 when VP Singh was the chief minister of the state. Several chief ministers who benefitted from this law and saved their taxes have been from across political parties, including Yogi Adityanath, Mulayam Singh Yadav, Akhilesh Yadav, Mayawati, Kalyan Singh, Ram Prakash Gupta, Rajnath Singh, Sripati Mishra, Vir Bahadur Singh, and ND Tiwari. After a news report made this disclosure, many politicians said they were not even aware of it. A senior finance ministry official mentioned that for the financial year 2018-2019, the state government had paid Rs 86 lakh as the ministers’ tax liability.

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The tale of two states, Haryana and Jammu Kashmir is no different. Before Punjab, Haryana had passed the Haryana Salaries and Allowances of Ministers Act, 1970, according to which the tax obligation on the salaries and allowances of its cabinet ministers would be paid by the state government. This rule applies to even the members of the Haryana Legislative Assembly. In 1956, the law was enacted by Jammu and Kashmir relating to salaries and allowances of its ministers, including ministers of state. In 1957, another law was introduced on salaries and allowances of its deputy ministers. Both these laws were amended in 1981 to declare that any income tax payable by these representatives on their official salaries or allowances or any increment to the income tax payable by them due to their official salaries or allowances would be disbursed by the government. Importantly, the Fifth Schedule of the Jammu & Kashmir Reorganisation Act 2019 stipulates that these two rules will remain in force even after the restructuring of the state into two union territories which came into force on October 31, 2019.

To conclude, the above stories reveal a state government-sponsored travesty. When everyone is taking a cut at source (tax deducted at source), our representatives cannot be blessed with undue advantage. This is against the philosophies of natural justness. It is not only immoral to settle the tax of minsters who have already received money for the services rendered by them, but also technically faulty because the income tax by the government for any person is a prerequisite and is again taxable. At a time when India is handling a problematic economic condition due to the fatal coronavirus pandemic, the VVIP treatment meted out to elected representatives continues to exploit public money.

—The writer is a financial and tax specialist, author and public speaker based in Margao, Goa

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