By Aman Basha
Thoughts on the discussion about the Impossibility of Indo-Islamic Reform
A few days earlier, I had written about what I perceived as the Impossibility of Indo Islamic Reform and tried to draw ideas for the ideal medium of reform taking the life and work of Hamid Dalwai as a counter example. The responses and replies received were not only encouraging, but highly illuminating for me as well. This post here can only serve as the natural continuation and conclusion of the former.
I would firstly like to thank the wonderful commenter who introduced me to the Bharatiya Muslim Mahila Andolan and Zakia Soman. In an act of laziness, I essentially took the liberty of taking a great deal of the points discussed and presenting the same while adding a few questions of my own. The conversation, split into two parts, is placed below:
Indo Islamic Culture: Its History, Challenges and Solutions with Zakia Soman
The most interesting and surprising part for many would be that the BMMA is interested in seeing a Codified Muslim Personal Law come in place of the Shariat Act for Muslim citizens of India. To develop such a law requires resources and time but this would be a herculean task that requires large-scale backing of scholars, civil society members and ordinary Muslims against the current Islamic establishment that would react with its full strength and power.
A lot of these debates and discussions could be rendered meaningless if the Government in its wisdom decides to implement the Uniform Civil Code (made polarizing and an emotive issue by the Government itself). Yet the Government, that chose to buck the international glare after declaring 370 null and void, seems to have forgotten the much needed implementation of a Uniform Civil Code to end decades of partial treatment of an individual just because he belongs to a particular faith.
But that may well be precisely the reason why the UCC will not be implemented by the present Government, because they wish for these different standards to exist for different religions and ensure the continuity of the unique tax break that exists for someone who declares himself a Hindu in the form of the HUF.
The Impossibility of the Uniform Civil Code and more With Zakia Soman
The HUF is something many must have heard of, this is a small explainer of how it works. Originally introduced by Dr Rajendra Prasad for Hindu joint families, the HUF consists of a common ancestor and his lineal male descendants and their families while being optional for the daughter. The HUF is treated as a separate tax entity and is taxed at individual tax rates. To put it simply, the Income Tax Department in 2016 estimated that the total tax payable for assets under the HUF is less than 10% and without the HUF shield, would immediately go up to 30%. The HUFs formed are increasing and well over 10 lakh, while joint families are continuously breaking down.
In numbers, the HUF saves Hindu families as well as Sikh, Jain and Buddhist families nearly 8500 crores (circa 2016) in potential taxation while depriving families of other religions this advantage. It is not surprising that most political dynasties like the Badals have their assets under the HUF.
What would also not be surprising is the breakdown and socio-economic backdrop of these HUF assesses. It is self explanatory why leave the BJP, no party worth its salt is committing to true secularism by abolishing this inherently biased tax system. Like anywhere else, Deep Throat’s “Follow the Money” always brings the receipts. The financial advantage gamed into the system is an effective shield that no UCC can be allowed to penetrate. This leaves one with the most surprising reaction of all: the Sangh Parivar is right, India was never a secular state. But what happened to trying to be one?
Sources:
- https://economictimes.indiatimes.com/wealth/personal-finance-news/tax-saving-tool-huf-may-cease-to-exist-law-commission-proposes-to-abolish-it/articleshow/65856948.cm
- https://www.news18.com/news/opinion/if-uniform-civil-code-means-hindus-losing-benefits-like-hindu-undivided-family-so-be-it-4780820.html
- https://csss-isla.com/
Rahul
October 21, 2022
Aman, you are welcome!
A couple of things – the first video is private, could you please look into it.
Second, if you want to read up on reformist voices in the Muslim world, please look up Pakistan’s Javed Ahmad Ghamidi. He is a scholar and a gentleman. Would also be great if you could get a chance to interview him.
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gnanaozhi
October 21, 2022
Couple of points,
1) as per your own ET link, the differential is 20% on 3,000 cr. Which means an increase of 600 cr not 7,000 cr.
2) am no CA but the IT website does not have anywhere a flat 10% tax rate. The basic exemption is higher @2,50,000 but the max slabs are taxed at 30%.
https://www.incometax.gov.in/iec/foportal/help/individual/return-applicable
3) are you arguing that art 370 was a fair law that should have stayed?
4) this whole post quite frankly smacks of a conspiracy theory. My guess is that even when thinking Muslim moderates like yourself oppose such reform (as 370) in the name of it being “anti minority”, or the CAA the street veto has given a pause.
Because, the mere act of taxing ONLY Hindu temples or indeed taking wholesale control of Hindu temples by the state has lead to 10’s of thousands of crores of revenue loss for Temples. A case in TN HC (sub judice) is hearing a petition where a lax enforcement by the hrce has lead to 1,000’s of crores in revenue loss from temple lands. That’s just TN.
The 5 southern states have 90,000 temples under state control, with a revenue of 12% on all incomes earned by these being applied on them. “secular”states like Bihar have added additional taxes (4%) on temple incomes.
So whatever the alleged savings are from the HUF, the net loss for the Hindu faith is orders of magnitude worse.
You then have the Pandora’s box of reservations based on faith in minority institutions. You then have the exemption of minority educational institutions from RTE (10’s of thousands of Hindu trust run schools have been shuttered.
To be very Frank this is a much deeper topic and I personally believe we aren’t a secular state but a pseudo secular one and these laws ALL need to go. We need to truly be a secular state where the state has no business being involved in faith.
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Aman Basha
October 21, 2022
@gnanozhi: The HUF article’s statement is quite confusing; even I wasn’t sure if they were talking about 20% increase in the tax collected or the effective tax rate increasing by 20% from 10 to 30 but I saw this study which compares HUF, individual and corporate tax rates across Indian history which points to the latter being the case.
https://journals.openedition.org/samaj/4300
About 370, my point is more that if the 370 repeal, which was more difficult and challenging than an UCC, can be done in the face of possible international pressure, why hasn’t the UCC been implemented?
Life can be very incomplete without conspiracy theories 🙂
About your remaining points, I really have no idea TBF.
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Aman Basha
October 21, 2022
@Rahul: Thanks again 🙂 I’m sorry but the video has some problems so I made it private. Here’s the proper version:
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RK
October 21, 2022
To the best of my knowledge, HUF is taxed in the same way as an individual; the slab rates are the same. So apart from basic exemption & lower rates, I do not know what are the tax benefits of it.
Also, only ancestral wealth can be part of HUF, not inherited. Only for the 3rd generation, inherited wealth becomes ancestral.
I’m a CA & did my articles in a medium-sized firm & did not come across a single case of HUF and nor have I heard any of my friends talk about handling a HUF. So, I do not think it is very common. This forum has more than one CA, so waiting for others comments.
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Madan
October 21, 2022
RK: “To the best of my knowledge, HUF is taxed in the same way as an individual; the slab rates are the same. So apart from basic exemption & lower rates, I do not know what are the tax benefits of it.” – I agree with the caveat that I have been on the export-import side for years and my involvement with taxation now is limited to filing returns for family members and a few friends/relatives, all as individuals. But even the tax website has the same form and same slabs for individuals and HUFs. So the benefit simply is that you can park your property and investments in HUF (but at which point there will have to be equal ownership of the HUF property by all coparceners) and the income from that (rent/interest) gets taxed at a lower slab not because it’s HUF but because that level of income attracts a lower rate of tax. That is, if the HUF income exceeds 10 lakhs, it’s tax neutral. But at a level below that, you can get the benefit of a lower slab (if otoh you parked all your assets in a non-working spouse’s name, it would attract clubbing provisions).
There is SOME benefit there but it’s not earth shattering. I mean, if you make income in the 30% and above slab in your individual capacity and then have say another 5-6 lakhs of income from investments, the tax savings from HUF don’t exactly move the needle.
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Madan
October 21, 2022
RK: I did my articles in a small-medium sized firm too and the senior partner did have his HUF. One of the CAs working for him handled his returns so my memory of it is foggy even without the brain fog. But I don’t recall the tax rates being lower for HUF than individuals. Yes, HUF can claim deductions under 80C and 80D like individuals (and unlike partnerships). But again, you get to claim that once for the same investment so to get the benefit of that, you would need to have investments (aka insurance premiums or mf payments) exceeding the 80C threshold in the first place.
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Kp
October 22, 2022
Well if you are a Hindu it used to be 10 rupees to register your marriage for others 1500, don’t know what the going rate these days are.
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