What is the rationale for taxing CG provisions as proposed?
As we know, the DTC proposes to chart a new path with respect to taxing income. Many of the concepts, as evolved internationally in the last decade, are proposed to be introduced. As announced, the idea is to do away with large number of exemptions and deductions. At the same time, to levy the tax on real income at a low rate. If we look from the said perspective, the methodology proposed to be adopted for computation of CG is that tax has to be levied on the gain which has been en-cashed. However, since such gain will be consisting of appreciation in the market value due to inflation, and consequential erosion in the value of Rupee, deduction is permitted in the form of CII. Once the element of inflationary value is taken out, the amount of CG represents the income derived. Therefore, it should get the same treatment, like Income from Employment, Business etc. If the amount received is in the nature of income, there is no reason why it should get soft treatment. More particularly when
