Tax loophole benefits Himachal MLAs?

Documents obtained through an RTI from the Himachal Pradesh Assembly reveal a significant loophole in the taxation of allowances received by MLAs.

The records show that MLAs in the state receive a salary of Rs 55,000 per month and allowances amounting to Rs 1,55,000 per month, totaling Rs 2,10,000 monthly. Crucially, MLAs are not required to submit any bills or proof of expenditure for these allowances, which remain untaxed, unlike their salary.

This discrepancy has raised concerns about the potential misuse of public funds. According to the Assembly’s rules, allowances should be supported by valid documentation. Without such proof, these allowances should be considered part of the salary and therefore taxable. The absence of this requirement allows MLAs to declare only Rs 55,000 as taxable income, while the remaining Rs 1,55,000 is effectively treated as tax-exempt.

Ravi Ranaut, a prominent student leader at Himachal Pradesh University, has vocally criticized the current arrangement. In a press release, Ranaut stated, “It is unjust that MLAs, while drawing a salary of Rs 55,000 per month, are exempted from submitting bills for allowances totaling Rs 1,55,000 per month. This lump sum is paid without any accountability, allowing them to report only Rs 55,000 as taxable income. The Income Tax Act does not permit such exemptions for ordinary citizens who are required to submit bills to claim allowances.”

Ranaut has demanded immediate action to rectify this discrepancy. “All allowances without supporting documents should be stopped. MLAs should be paid only their salary, or if they continue to receive allowances, these amounts should be taxed unless proper bills are provided,” he asserted.