Income Tax and Mahatma Gandhi

[Prof. Dr. Yogendra Yadav]

Prof. Dr. Yogendra Yadav

Senior Gandhian Scholar, Professor, Editor and Linguist

Gandhi International Study and Research Institute, Jalgaon, Maharashtra, India

Contact No. – 09404955338, 09415777229

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Income Tax and Mahatma Gandhi

The income-tax is a feasible proposition on the ground of safety from any violent disturbance but I am more than doubtful as to any response being made by those who pay the income-tax. Nevertheless, if any satyagrahi desires to offer Satyagraha by not paying this tax, he may do so at his own cost with the permission of his leader. There remain, therefore, the political laws, and only the Press Act and other laws regarding printing lend themselves to civil disobedience but there also the only possible manner of civil breach is the establishing of unlicensed printing presses or of issuing an unlicensed newspaper, to do so at his own cost with the permission of his leader. 1 

I am speaking under correction, but my impression as it was then left on mind was that. I am quite prepared to study the thing and submit my reason on the score. But all I wanted to submit before the Committee was, that the fine imposed on the labourers was excessive and as you have pointed out was exacted from many of those here who were not here at the time and the time chosen for exacting the fine was most inopportune. And there I wish to say that the authorities are not to blame for selecting that time. They did not select that time, because it was Moharram time; it accidently happened to be so. It was too late for them to make any alteration, but whatever it was; it was difficult for the labourers to understand that it was not deliberately chosen. So the time was inopportune and to take away a week’s wage from the labourers was not a proper thing.  Mehar Singh, son of Daulat Singh, applied for remission of income-tax in Case No. 36 of 1917 in the same court. The magistrate in dismissing the application remarked among other things: There is a village called Leihia in the district of Muzaffargarh. A large crowd besieged the residence of the Naib Tahsildar, assaulted the chaprasi and the rural policeman. Some people were arrested. 52 of them were tried under Section 147 of the Indian Penal Code. On appeal, the Sessions Judge acquitted some, reduced the sentences of the others. Mr. Cold stream, the Judge in question, remarked that “the people had real grievances for which they wanted to find expression”. 2

A labourer like me who labours for the State for mere maintenance contributes more to the State than a Viceroy who receives Rs. 20,000 together with royal residencies and contributes to the State, if his salary be not income-tax-free, a certain percentage of his salary. It becomes possible for him and those who belong to the system of which he is the chief to receive what he does out of the labour of millions. And yet many Englishmen and some Indians honestly believe that they serve the State (whatever the word may mean to them) more than the labourers and, in addition, contribute from their very salaries a percentage towards the upkeep of the State. There never was a grosser fallacy or a more absurd presumption than this modern belief in self-righteousness. 3 Would revise the revenue law and graduate the land tax so as to bring it in a line with the income tax leaving a minimum of income from land free of tax. 4

Existing revenue derived direct from the Provinces, e.g., Income Tax, and from the States through the territories ceded by them and in other ways, be accepted as common sources of Federal revenue against expenditure to the ex tent of the revenue that might accrue through such heads. This method secures the States against any risk of undertaking liabilities beyond the actual income. 5 The statutory law says that charitable institutions, though they make profits, are free from income-tax. I am the founder and President of the All-India Spinners’ Association. I can give you my word that it is a purely charitable association. It exists to serve the poorest in the land through hand-spinning and hand-weaving. But simply through legal quibbles, disbelief of the evidence tendered and, I apprehend, for its connection with the Congress in that it got its charter from the Congress, the officials have decided do levy the income-tax. The profits are not denied but they have never been used for private or personal gain. The whole of the Executive of the Association is honorary. The Association has gone to the High Court of Bombay which has thrown out its petition on a legal flaw. It is appealing to the Privy Council. I do not know what will be the result. Meanwhile the Association has already paid a certain amount of the tax and is likely to be called upon to pay up to five lacs. They will not stay the levy pending the proceedings. But my request is for you to intervene and save the five lacs for the poor. Let me tell you that during the past 20 years of its existence the Association has district Butted among the poor nearly four crores as wages. 6

My point is that khadi, i.e., hand-spun and hand-woven, or hand-spun yarn should be excluded from all taxes. Logically, hand-woven cloth also, though woven from mill yarn, should be excluded for the tax hits the handloom weaver. Therefore, the exclusion of dhoti, sari and lungi is of no help. The revenue derived from khadi is altogether negligible. The revenue derived from hand-woven cloth is fair because hand-woven cloth is large enough in quantity to yield some income to the treasury, but at the poor weaver’s expense. In taxing khadi, however, thousands of poor hand-spinners are so hard hit that the tax becomes so deterrent as to be punitive. I am quite certain that such was never the intention of the farmers of the Act. The oversight has only to be brought to the notice of the Government to be remedied. I may also mention that all the khadi depots of the All- India Spinners’ Association are benevolent concerns. The conductors are servants of the A. I. S. A. which according to the recent judgment of the Privy Council, has been held to be a benevolent institution, not liable to income tax. 7

 

References:

1. Instructions for Satyagrahis, June 30, 1919
2. Evidence before Disorders Inquiry Committee Vol. II, pp. 107-
3. Young India, 24-4-1924
4. Young India, 1-11-1928
5. Letter to Nawab of Bhopal, October 19, 1931
6. Letter to Lord Linlithgow, February 8, 1942
7. Letter to R. G. Casey, January 8, 1946