Why public in Andhra, Telangana picks up ministers’ income tax bill

The people of Andhra Pradesh and Telangana not only pay the salaries of their cabinet ministers – including the chief ministers – but also the tax that accrues on those salaries, The Federal can reveal.

Respective departments in the two states have recently issued a series of government orders (GOs) – copies of which The Federal has obtained – releasing funds for payment of the tax dues of these elected representatives for the current fiscal (2020-21).

Andhra Pradesh Chief Minister YS Jagan Mohan Reddy, for example, owed ₹7,14,924 on the taxable income he received from the government during the current year. The General Administration Department issued a GO on March 18 releasing the amount. The same GO also accorded sanction for payment of ₹2,91,096 towards income tax owed by Minister for Information and Public Relations, Perni Venkataramaiah.

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The government in Telangana is similarly generous –  with the public’s money. The Department of Health, Medical and Family. Welfare released ₹2,16,938 on February 23 for payment of income tax on Health Minister Eatala Rajender’s behalf. The Industries and Commerce Department paid ₹1,66,670 on February 24 on behalf of its minister, KT Rama Rao. The Department of Agriculture issued a GO on January 29 releasing ₹87,984 to settle the tax liability of S Niranjan Reddy.

‘Undue Privilege’

Clause (4) of Section 3 of the Payment of Salaries and Pensions and Removal of Disqualification Act, 1953, of the two states stipulates that the government should pay the tax on the incomes of CMs and ministers. However, when the law was introduced, the salaries and emoluments of elected representatives were much more modest.

Also read: Gloom in AP, boom in Telangana; a contrasting tale of sibling states

But, over the decades, successive governments have raised salaries of elected representatives through legislations. Every new government revises the salaries. Perks and allowances are separate.

“These hefty pay packets are divided into taxable income and non-taxable allowances and perks,” Forum for Good Governance secretary Padmanabha Reddy told The Federal. “What is shown in the taxable income category is much less. If the ministers are not willing to pay taxes on even that… that should be unacceptable.”

Reddy said the practice was “against the principles of natural justice”.

“When everyone is taking a cut at source [Tax Deducted at Source], a few in positions can not be given the undue privilege.”

The FGG comprises people from different walks of life who campaign for transparency and good governance.

The Telangana chief minister’s salary is ₹4.10 lakh per month. Their counterpart in Andhra get ₹3.35 lakh per month. Taxpayers also pay for their accommodations, convoys and other perks and privileges.

EAS Sarma, former secretary to the Government of India said income tax is a personal tax, which depends on the remuneration paid by the government to a minister and the income accruing to the minister from other sources. “While ministers should be remunerated for their services in the government, a reasonable monthly amount should be fixed upfront and the taxation part of it left to the individual. That will be a straightforward way to deal with the problem. Accounting-wise, it is less cumbersome.”

Retired Telangana bureaucrat and legal expert Mohammed Shafiquzzaman said the amount paid as income tax on behalf of ministers would also be considered as income, “and that is again liable for tax”.

“It is not only unethical to pay the tax of ministers who are already paid for their services, but it is [also] technically flawed. Because the income tax by government for any person is a perquisite and is again taxable,” he said.

The Yogi Adityanath government in Uttar Pradesh called an end to a similar practice in 2019, after facing criticism for paying the income tax of the CM and his ministers.