§ Sir GODFREY BARING
asked the Under-Secretary for India whether he is aware that the revision of the Income Tax law, as suggested in Section 5 of the Finance Bill, will compel British traders who are partners in a limited liability company trading in India to pay Income Tax on the whole of the profits paid to them in the form of dividends, even though a proportion of such profits paid as dividends are not brought to England but, as is usual, reinvested in the business for the purposes of that business, while, in the case of foreign firms practically domiciled in the United Kingdom and doing similar business in India, the members of such firms, many of which are to be found in our Northern cities associated with cotton and other trades, escape all liability for the payment of Income Tax in respect to similar profits earned in India in a similar manner; and whether he will endeavour to secure the prevention of this handicap to British traders and take steps to prevent an undue preference being given to the foreigner in respect of our Indian Empire?
The Secretary of State has received certain representations on the effect of Section 5 of the Finance Bill, and is considering them.
§ Sir GODFREY BARING
also asked the Under-Secretary for India whether he is 48W aware that Section 5 of the Finance Bill as drafted will prevent the flow of capital from this country to India, and therefore handicap the financing of the Indian Empire, inasmuch as it proposes that Income Tax should be computed on the full amount of the income whether the income has been or will be received in the United Kingdom or not, and will therefore nullify the advantage of Indian investment hitherto accruing to insurance companies and other large corporations required to retain large sums in shares of a character easily realisable, which companies and corporations, after paying to the Indian Government an Income Tax of about 2½ per cent. on all dividends, usually regard the balance of dividends as capital funds for reinvestment in Indian Stocks, and do so reinvest them, and who, under the proposed revision, would have no incentive to reinvest in this matter, and would therefore avoid Indian Stocks to the detriment of Indian finance; and whether he will take steps to secure the amending of Section 5 of the Finance Bill so as to prevent this hardship to India?