Dr. Raja J. Chelliah, Tax Reform Committee had submitted its final Report, which is reported in 197 I.T.R. p.176 and the Committee had recommended to continue the Gift-Tax on the following reasons.

"3.66 The Committee favours the continuance of the imposition of the Gift Tax. Even though the top marginal rate of income tax as well as the spread between the rates have been reduced, gift of assets to individuals other than minor children could still be used as a means of reducing the total tax liability of a family (either nuclear or extended). A tax on gifts is therefore, necessary as a means of discouraging such transfers. Also the gift-tax cannot be said to affect incentive or lead to any enquiry".

"3.67 The exemption level of Rs.22,000 was fixed in 1985. Considering the rise in prices and the increases in the threshold level, for income tax, gifts in a year not exceeding Rs.30,000 may be exempted from the tax."

The Central Government acted contrary to the above recommendations and deleted the provision of Gift Tax from September 30, 1998 (1998-99) Budget.

Due to deletion of the provisions of the Gift Tax Act, the Central Government has lost considerable revenue as Income-tax within the period of last five year. The suggestion is that Gift Tax should be re-introduced with the following provisions:

1. Rs.30,000/- Gift exempted, which is recommended by Dr. Chelliah's report and which was under the repealed Gift Tax Act.
2. Levy 10% of tax on the amount gifted to the donee. Every donee to whom the gift is given should have P.A. No. if any gift is given to him.
3. Gift is complete only when gift tax is paid and recovered.

The minor to whom normally gift is made will have to take his own Permanent Account Number and would start his life by filing his Income-tax Return. The writer has suggested Pension Scheme for every assessee who pays income-tax and so the minor will be considerably benefited as he will start contributing towards pension funds.

The above suggestions will also facilitate the provisions of clubbing or it may not be necessary to club the income of minor with his parents once a minor is also paying income-tax on his assets and he has got also Permanent Account Number.

The above suggestion will have far reaching effect as all the minors of middle class and higher-middle class and rich people will have their Permanent Account Number and number of assessees will also increase to facilitate economy of white money.