The Finance Minister has proposed a move towards Exempt-Exempt-Taxed method under which savings and interest will be taxed at the time of their withdrawal.

The Government has committed to an inflation rate of 5 per cent.

If someone gets back his money with principal and interest, say, after five years, its purchasing power would have declined substantially. Thus he loses on both principal and interest.

This principle is already recognised and relief granted through indexing in the case of capital gains tax. The government should think of a similar procedure for the E-E-T method also.

`International practice' is the justification for the new approach. But how is it relevant to our fiscal system?

We do not follow the best international practice where the taxpayer is concerned especially in prompt refund of excess tax.

A. Seshan

Mumbai

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