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Do Tax Loopholes Favour Indian Millionaires?

| Updated: April 11, 2024 12:39

On one hand, we celebrate 25 more Indians making it to the Forbes list of world billionaires, taking the number from 169 to 200 in 2024, while on the other hand, Rajeev Chandrasekhar, a well-known industrialist, long before he turned to politics, has declared ‘social service’ as his occupation with relatively modest assets to go with this new role.

But Chandrasekhar has always led a well-publicised good life, owned a fleet of expensive luxury cars, super bikes and a private aircraft that he used regularly as an MP. Strangely enough, his affidavit claims that he owns one bike – a 1942 model Red Indian Scout he bought in 2004 for Rs10,000.

The sale of his 64 per cent holding in BPL Telecom in 2005 alone gave him a legitimate windfall of Rs4,400 crore that is now deployed into a diverse spectrum of businesses such as media, defence, infrastructure, aerospace, capital market, etc. And yet, Chandrasekhar declared a taxable income of just Rs680 in 2021-22 and Rs5,59,200 in 2022-23. Income-tax returns detailed in the election affidavits of 2018 and 2024 show that Chandrasekhar’s income dipped from Rs28 crore to Rs5.5 lakh in seven financial years.

He says, “My only income is my minister’s salary”. About income on investments such interest on deposits, bonds or mutual funds, dividends and rentals, his answer is ‘no’. Yet his affidavit declares a fairly large portfolio of investments and fixed deposits.

The sudden shrinkage of Rajeev Chandrasekhar’s already modest net worth (Rs65 crore in 2018 and annual income of Rs28 crore) is stunning. According to a complaint filed by advocate Avani Bansal and Renjith Thomas with the election commission of India (ECI), Chandrasekhar had declared assets of just Rs36 crore. This includes total moveable assets of Rs9.25 crore, but omits a hefty Rs45 crore of investments and that his declared immovable assets (Rs14.4 crore) do not include a posh bungalow at Koramangala in Bengaluru (receipt attached with the complaint).

They also allege that he has declared only the book value of his investment in four group holding companies – a paltry Rs6.38 crore, while a filing with the ministry of corporate affairs (MCA) in 2022-23 puts it at Rs1,610.53 crore. (See table from the complaint).

On 22 September 2022, ECI informed Renjith Thomas that it was forwarding his complaints of 2018 and 2020 along with Chandrasekhar’s election affidavits to the central board of direct taxes (CBDT) for verification. There has been no progress on the matter. This week, ECI has again responded to the Congress’s complaint saying it has forwarded the complaint to CBDT.

Interestingly, during this very same period, CBDT had issued demand notices to 10mn (million) ordinary Indians for tax dues dating back to 2005 or earlier and had ruthlessly adjusted tax refunds due to people against decade-old claims that were being made for the first time.

According to ADR, the average assets declared by Lok Sabha candidates are Rs4.51 crore and 53 MPs are billionaires. It says, the total assets of 763 sitting MPs of India are Rs 29,251 crore. In March 2024, ADR’s scrutiny of affidavits revealed that 25 MPs had declared assets of over Rs100 crore in their affidavits.

Bandi Partha Saradhi of the Bharat Rashtra Samithi (BRS) is the richest MP with declared family assets worth Rs5,300 crore. He is chairman of the Hetero, the pharmaceutical group. Alla Ayodhya Rami Reddi is worth Rs2,577 crore; actress Jaya Bachchan of the Samajwadi Party is worth Rs1,001 crore. Congress MP Nakul Nath has declared assets of Rs 660 crore, while top lawyers Kapil Sibal and Abhishek Manu Singhvi are worth Rs608 crore and Rs649 crore, respectively.

The Aam Aadmi Party (AAP) also has issues with two of its MPs being anything but ‘aam admi’: Sanjeev Arora is worth Rs460 crore and Vikramjit Singh Sahney is worth Rs498 crore. Controversial Praful Patel has declared assets of Rs416 crore, Parimal Nathwani is worth Rs396 crore; Kartik Sharma is worth Rs 390 crore; DK Suresh is worth Rs338 crore and Raghu Rama Krishan Raju is worth Rs325 crore.

Chandrasekhar’s silence on the perplexingly and substantial undervaluation of his wealth raises serious concerns. As a minister and MP, he is in a position to influence policy decisions affecting the commercial interests of his businesses. For instance, The Wire had reported that he was a member of the standing committee on defence where he has significant business interests. In another article, it had questioned his media investments. He had obtained an ex-parte injunction against the publication to have the articles taken down; the order was subsequently vacated.

However, the issue that concerns taxpayers is the CBDT’s silence on the sudden shrinkage in Chandrasekhar’s declared assets for two years. The minister has not renounced, gifted, transferred or ceded control over his assets. It seems, Chandrasekhar has merely organised his assets in a manner that avoids full disclosure in his affidavit. Significantly, despite being a billionaire, he is able state that his vast assets contribute little to his annual taxable income!

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