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Royal Air Force Personnel (Income Tax)

Volume 389: debated on Thursday 13 May 1943

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asked the Secretary of State for India whether he is aware that members of the Royal Air Force serving in India have the Income Tax payable in that country on their Service pay deducted at source, irrespective of whether tax is paid at home, without filling in a form and without any married or family reliefs, upon the full daily rates of pay including allotments made to dependants at home; that this practice is creating hardship for the men concerned; and whether he will take steps to abolish it.

Under Indian Income Tax law no provision is made for rebates for earned income, for married persons, and for children. The result is that although the rate of Indian Income Tax is considerably lower than that of British tax it may happen that a senior N.C.O. or junior officer who has a family is liable to tax in India where he would escape liability in this country. United Kingdom tax is not deducted from pay issued in India, nor from allotments of pay or family allowance paid in the United Kingdom. In the case of officers, Indian tax is levied on gross pay, including family allowance, but in the case of other ranks the compulsory allotment is included in gross income for the purpose of determining the rate at which Indian tax is to be charged, but it is not taxed in India. The Government of India have recently had under consideration the adequacy of the pay of other ranks and of junior officers, with reference both to the cost of living in India and to the tax position, and certain ameliorative measures have already been introduced. I am, however, closely watching the situation.

While thanking my right hon. Friend for his reply, might I ask whether, in view of the fact that this was a specific complaint from members of the Force serving in India, he can make it clear whether they are liable to pay tax in both countries?

The Indian Income Tax is on an entirely different principle from ours, and is levied in India. If an officer has an income in this country, and is taxed on that as well as paying in India, that is a question for the Chancellor of the Exchequer.