“According to custom, the Budget declaration for the coming year needs to be presented today. By an unexpected and sad chain of occasions, the Finance Minister, who might typically have made this assertion this afternoon, is no longer with us. This heavy responsibility has fallen upon me almost at the remaining moment.”
T T Krishnamachari resigned as finance minister of India in February 1958 after a one-person commission headed by former chief justice M C Chagla submitted his document within the notorious Mundhra scam.
Nehru, a man of letters, would lean on his rhetorical prospers to present the Budget for 1958, a file that handled numbers and accounting jargon.
Nehru referred to as his Budget “pedestrian” because it turned into merely a continuation of the direction taken by Krishnamachari in the Budget of 1957 wherein he added “some novel taxes,” as Nehru is known as them.
In his speech, Nehru stated, “Last 12 months, my outstanding predecessor in this workplace provided a Budget announcement which, in a few respects, was unusual and which worried great additions to taxation. Some novel taxes have been brought, and an attempt turned into made to result in a reorientation of the USA’s tax structure. I believed then, and I trust now, that this became the right route for us to journey and that we must keep to pursue this direction.”
The Budget of 1957 supplied through Krishnamachari brought new taxes — wealth tax and expenditure tax. While justifying the want for enforcing a wealth tax, Krishnamachari said, “It is recognized that earnings, as described using present profits tax laws and practice, isn’t always a sufficient measure of tax-paying capability and that the device of taxation on earning must be supplemented by way of taxation based totally on wealth.”
He stated that the flow to impose wealth tax “guarantees, over a period, to lessen the possibilities of tax evasion”.
The 2d tax brought in that yr’s Budget become expenditure tax. At the back of enforcing a tax on expenditure was to cut back excessive spending and promote savings.
While introducing the levy, Krishnamachari said, “It is, however, a tax which, given effective administrative arrangements, maybe a robust tool for restraining ostentatious expenditure and for promoting financial savings. In the existing instances, I assume all we can do is make a small beginning. I endorse to levy this tax simplest on people and Hindu Undivided Families…”
In his Budget speech of 1958, Nehru failed to tinker an awful lot with the huge taxation coverage adopted by using Krishnamachari in the preceding year. However, he introduced ‘present tax’ indirect taxation to scale down avoidance and evasion.
While laying out the tax notion, Nehru said, “The transfer of houses thru items to at least one’s close to relations or associates is one of the most common types of avoidance of not handiest the Estate Duty but also of Income-tax, Wealth Tax, and even the Expenditure Tax. The handiest manner of correctly checking this exercise is to levy a tax on presents. Such a tax is already being levied in different countries, for instance, the USA, Canada, Japan, and Australia.