ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Differential Interest Rates-Another View

Another View A Bagchi BIMAL JALAN and Boswel, authors of the two articles "Differential Interest Rates: I and II" (September 4), Jalan in particular, deserve to be congratulated for bringing out certain fundamental issues, crucially relevant to the subject, which do not figure explicitly in the Report of the Hazari Committee or the Note of Dissent. There are, however, some gaps and inconsistencies as well as errors of assumption in the arguments of the two authors which this note seeks to discuss.

Depreciation and Current Repairs in Income-Accounting-Independent or Interdependent

Depreciation and Current Repairs in Income-Accounting Independent or Interdependent?
A Bagchi Income computation for tax purposes is supposed to allow for all expenditure incurred in earning it so that the incidence of tax falls on income only and not on any of the capital investment. An important component of these expenses is the 'user cost' of the capital employed in depreciable assets. Thus the depreciation allowance has to be adequate so as to enable the tax-payer to maintain his capital intact.

Some Aspects of Deposit Mobilisation-A Comment

Some Aspects of Deposit Mobilisation A Comment A Bagchi IN his article "Some Aspects of Deposit Mobilisation" (September 5, 1970, pp 1495-97) V V Bhatt has suggested certain lines on which schemes might be framed by commercial banks "to induce a higher rate of saving generally and saving in the form of bank deposits in particular". In his view if deposit growth is to be stepped up special schemes linked with the motives underlying the urge to save should be framed. The urge to save, according to him, steins from a desire to own a bouse, to provide for old age, to bequeath property to children and to provide for contingencies like illness. Hence, he argues, it would tempt people to put their money in banks if the banks offered to advance a loan of an amount equal to one's deposits accumulated over a specified number of years for, say, house building or daughter's marriage, etc. With similar expectations many of the commercial banks are now operating special deposit schemes said to be tailored to suit the convenience of different segments of depositors. This note seeks to examine, in broad terms, whether the presumption underlying these expectations is warranted in theory and by the facts of the Indian economy and the extent to winch schemes such as those advocated by Bhatt are likely to help achievethe desired aims. An attempt is also made in this context to explore areas where deposits could be looked for more fruitfully.

Income or Capital

Income or Capital?
A Bagchi Since income tax is a tax an income and not on capital, capital sums are not eligible to ` tax. People therefore attempt to sell their future income for a capital sum, in an attempt to avoid income tax. Income being the base, the distinction between a revenue receipt and a capital receipt is, therefore, of crucial importance to any system of income taxation.

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