Illogical tax demand: Taxing banks' free services defies business logic

The tax department imputes a value to each free service that a bank offers and argues that it is liable to tax

Pressures on the revenue administration to enable the finance ministry to meet its fiscal deficit target are prompting the tax department to go to absurd lengths to winkle out money from the taxpaying system. The recent warning that salaried taxpayers would face greater scrutiny this year was one example, and it is a remarkable move when Finance Minister Arun Jaitley pointed out in his Budget speech that salaried individuals paid three times more income tax per head than business taxpayers (Rs 76,306 versus Rs 25,753). Another example is the notice sent to banks imposing a collective Rs 400 billion in