‘Wisdom of babus’: Modi supporters are blaming bureaucracy – not BJP – for a new controversial tax

Tuesday’s notification that purchases made outside India using credit cards will now attract a tax collected at source of 20% has proved so controversial, even die-hard supporters of the Bharatiya Janata Party have criticised the decision.

According to the new procedure, which comes into force in July, this additional amount collected as tax can eventually be claim a refund when the spender files their income tax returns. This means that expenses of a family holidaying abroad, for example, will shoot up 20%, locking away the extra cash until they receive their refund.

“The decision is beyond tax terrorism,” said Surjit Bhalla, a former member of Prime Minister Narendra Modi’s Economic Advisory Council, in a tweet.

TV Mohandas Pai, chairperson of Aarin Capital Partners and vocal supporter of the Modi government, described the decision as “very perverse”.

“For the last 10 years, Income Tax authorities have, possibly, been given more power to go after citizens than in the previous 10 years for various reasons,” Mohandas Pai wrote in The Indian Express. “There seems to be a line of thinking in the government that citizens aren’t honest taxpayers and there’s great tax evasion.”

@narendramodi Sir this is very perverse and hurts honest tax payers, increases compliance, and shows distrust in all taxpayers!we trust our Govt but @FinMinIndia suspects all...

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