Monday, June 3, 2013

The Right to Information Act and Tax Exemption

There is a discussion on whether political parties should be subject to the Right to Information Act. I wish to comment here on a more general policy issue. A whole lot of enterprises in India are given tax exemption. Such exemption increases the disposable income of these enterprises by a significant amount.  The country extends them a variety of services such as police protection, making transport infrastructure available etc., without demanding they pay tax. In other words, other tax payers like you and I pay for these goodies made available to these enterprises, on the theory that their activities are socially beneficial. They are also given land etc. free or at subsidized prices by the Government. Whether these entities are socially beneficial or not is often in question. 

I would, therefore, argue that all tax exempt entities should be subject to the Right to Information Act. This will make their accounts and activities more visible to public scrutiny. They have as much a right to international visibility as tax exempt bodies connected with Indian cricket!

Srinivasan Ramani 

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