REASONS FOR TAXING INCOME NOTIFIED UNDER SECTION 10 OF THE INCOME TAX ACT :-

Every income should be taxable and every assessee must contribute minimum or maximum towards the revenue receipts in order to increase the revenue receipt, wipe out the debt and reduce the interest payment liability. On above basis, the suggestions are made with regard to income mentioned in section 10 of the Income Tax Act.

Under section 10 of the Income Tax Act, the incomes notified in this section do not form part of the total income in computing the total income of the previous year of any person. Under section 10, sub-sections (1) to (33) exempt from levy of income tax and the said income do not form part of total income of a person.

The entire income of a person or an association notified under section 10 is exempt from payment of income tax. The income tax requires to be charged and nominal tax at 2% to 5% should be levied on the notified entries. Main reason for levy of tax on the said income is the inability of the Central Government to manage non-plan expenditure within the revenue receipt. For Financial year 2001-02, the Government had borrowed Rs.95,000 crores for carrying out non-plan expenditure, viz. (i) Interest, (ii) Defence (iii) Pay (iv) Pension, (v) Subsidies and (vi) Grants.

The Standard and Poor rating on 19th September, 2002 has down-graded India's local currency sovereign rating to junk status and separate chapter is included in the Book. In view of the above serious financial conditions of economy of the nation, it is absolutely necessary that every income should be even nominally charged under the Income-Tax Act and exempted income and persons and associations should contribute towards the revenue receipt of the Central Government.

The tax-rate of 2% to 5% should be levied on the income-notified u/s.10 of the I.T. Act. It will not be difficult for the Associations notified to pay the said tax.