Written in : May 1998

The success of VDIS was probably the only bright spot in the economic horizon of the last year. Led by the success of the Scheme, the department is now on a major drive to expand the taxpayers base. That is expected to be done by promoting the scheme of selling of mandatory filing of returns based on four economic criteria.

To recap, if you fulfill any two out of four criteria, you must file your return even if you do not have taxable income. The four criteria being: ownership or tenancy of immovable property of specified area; ownership or lease of a four wheeler; expenditure on foreign travel of self or others; subscription to a telephone.

You must have already seen large ads in media promoting the scheme. You will see more of it. In addition, government has built up large databases of people fulfilling the criteria. For instance: It has information on foreign travelers - from travel agencies, airport authorities etc. Of owners and lessees of four wheelers from RTA authorities, finance companies etc. Of owners and occupants of properties from municipal authorities. And phone subscribers from the telephone department.

Moreover, government has started compiling databases of persons fulfilling other criteria who should also be checked out for being taxpayers. For instance, cell phone users would be prime candidates. So the government has been suggesting to all cell phone users to file returns. With such a large databases, the government has started contacting potential taxpayers with letters asking to file returns.

It appears that in Hyderabad itself, over one lakh letters/notices have been posted by the department to persons fulfilling one or more of the four criteria! That is some exercise. There is no doubt this exercise - coupled with the promotion of the scheme in media - will lead to a wider taxpayers base.

You are required to file a return under this new law only if you have not otherwise filed your return for the year. If you have filed your normal return, there is no necessity for you to file another return even if you fulfill two or more of the criteria.

If you do receive such notices, you should reply stating details of the returns filed by you. If, however, you have neither filed a return nor do you file a return before February 28, 1998, and the department tracks you down, you could be in trouble. It is better to file a return now and avoid penal interest.

The law requires you to file a return only in the year in which you fulfill two out of four criteria. If you fulfill them this year, but not next year, you do not file a return next year. We hope the government is as successful in widening the taxpayer base as it was in VDIS

Long term capital gains are computed after deducting from the sale proceeds 'indexed cost of acquisition' of the asset. Indexed cost is calculated after applying the cost inflation index rate of a particular year to the actual cost. The government has issued the rate for transfers made during the financial year 1997-98 as 331. That is, if you sell any property between April 1, 1997 and March 31, 1998 the cost inflation index applicable will be 331.

If the property was acquired before April 1, 1981, then the indexed cost would be 3.31 times the actual cost or value on 1.4.87, whichever you choose. If the asset was acquired after 1.4.87, then the indexed cost would be lower depending on the cost inflation rate of the year of acquisition.

We all love to hate lawyers. Anecdotes and jokes about lawyers are aplenty. I have offered some to you earlier. Here are a few more. And more will follow in future articles.

How can you tell when a lawyer is lying?

His lips are moving.

Why won't sharks attack lawyers?

Professional courtesy.

You're trapped in a room with a tiger, a rattlesnake and a lawyer. You have a gun with two bullets. What should you do?

Shoot the lawyer. Twice, to be sure.

How many lawyer jokes are there?

Only three. The rest are true stories.