FGG Questions Tax Exemption Rules for Telangana Legislators

The Forum for Good Governance (FGG) in Hyderabad has raised concerns over Telangana legislators declaring a basic salary of just Rs 20,000 to avoid income tax, despite drawing monthly payments between Rs 2.5 lakh and Rs 3 lakh.

The citizen forum questioned the statutory mechanism that allows elected representatives to treat the bulk of their monthly remuneration as tax-exempt allowances rather than taxable salary.

According to the FGG, the issue extends to newly appointed government whips. The organisation questioned the state government's decision to accord ministerial rank to three of the six recently appointed whips, each drawing close to Rs 4 lakh per month. These individuals also show only Rs 20,000 as salary to avoid tax liabilities.

The forum highlighted that the Chairman of the Legislative Council draws a monthly take-home amount of Rs 4,11,000 without paying income tax, as only Rs 41,000 is recorded under the salary component and the remaining amount is classified as allowances. The FGG stated that such an arrangement exists primarily to evade income tax.

The organisation referenced sub-section (4) of section 3 of the Payment of Salaries Act, 1953, under which the Telangana government pays the tax liability for the Chief Minister, Deputy Chief Minister, and other ministers. The forum argued that this legal provision violates Article 14 of the Constitution. It also noted that multiple other states have already abolished similar provisions, while Telangana continues to enforce them.

The FGG has demanded that the state government immediately scrap sub-section (4) of section 3 of the Act. Additionally, the forum urged the administration to adopt a policy of appointing only one whip per political party and to streamline accounting heads so that all legislators pay income tax on their actual earnings.