I refer to your article ?NRPT: a further dissection? published in l?express dated 21.09.07. By clear simple examples, the author pointed out how illogical is the NRPT.

For my part I wish to comment on tax on interest income which is also illogical. Let us take the following example: Mr X has a total emolument of Rs 200 000 and earns interest amounting to Rs 200 000 on a deposit in the name of his child. Suppose he opts for Income Exemption Threshold (IET) category B (one dependent) his chargeable income will be Rs 75 000 (total income of Rs 400 000 minus IET of Rs 325 000) and tax payable will be 15 % thereon amounting to Rs 11 250.

If Mr X opts for IET category A (no dependent) and files a separate return in the name of his child, he pays no tax as his income and the interest of his child taken separately is less than Rs 215 000 i.e IET category A. In fact he does not need to send any return at all.

Let us proceed to the extreme with the following example: MrY has a total emolument of Rs. 200 000 and three children having each a deposit of Rs 200 000 in their respective names. If he opts for IET category D (three dependents), his chargeable income will be Rs 375 000 (total income of Rs 800 000 minus IET category D of Rs 425 000) and he will have to pay tax amounting to Rs 56 250. Mr Y can save such a huge sumof money by not sending any return at all.

To conclude I am asking myself whether the above examples are legal ways for not paying tax on interest income.

G. L.