I-T Section 5A- A boon to Goans

The Income Tax Act 1961 has a special provision exclusively for Goan married couples governed under Portuguese Civil Code which entitles them to the benefit of division of Income in equal shares and consequent deduction claims resulting in substantial tax savings. There is history behind introduction of this section which reads as under: 

Apportionment of income between spouses governed by Portuguese Civil Code.

Section 5A

1) Where the husband and wife are governed by the system of community of property (know under the Portuguese Civil Code of 1860 as ‘Communiao Dos Bens’) in force in the state of Goa and in the Union territories of Dadra and Nagar Haveli and Daman and Diu, the income of the husband and of the wife under any head of income shall not be assessed as that of such community of property (whether treated as an association of persons or a body of individuals), but such income of the husband and of the wife under each head of income (other than under the head ‘Salaries’) shall be apportioned equally between the husband and the wife and the income so apportioned shall be included separately in the total income of the husband and of the wife respectively, and the remaining provisions of this act shall apply accordingly.

2) Where the husband or, as the case may be, the wife governed by the aforesaid system of community of property has any income under the head ‘Salaries’, such income shall be included in the total income of the spouse who has actually earned it.”

Ever since income tax was introduced in Goa after liberation from April 1, 1963, there had been utter confusion and controversy as to the exact status of Goans for the purpose of filing their tax returns, since Goan couples married under Portuguese Civil code were entitled for equal shares in all the properties and income of the Communion.

In absence of any guidelines or legal precedents, tax returns were filed with the status of BOI, AOP and Individuals with different permutations and combinations of sources of income without any certainty. This was litigated before judicial authorities for over 30 years. The final blow came with the decision of Bombay High Court in Madhu Timblo’s case where it was held that entire income of both the spouses should be clubbed together and taxed. This would mean that every Goan couple, even small illiterate street vendor couples would have been liable for tax unknown to them with sword of Inspector Raj constantly hanging on their heads.

When various stake holders with the Chartered Accountants (CA) fraternity in forefront were contemplating steps to take to overcome this judgement, including appeal to the Supreme Court which would have involved heavy costs with uncertain results, a small news item appeared in local papers about visit of Finance Minister Manmohan Singh to Goa to inaugurate a branch of then little known Bicholim Urban Co-operative Bank. CA fraternity took this opportunity to fix a meeting with the Finance Minister (FM) through Harish N Zantye, then chairman and founder of the bank and North Goa-Congress MP, who had special relationship with FM, to present the case. Earlier to this meeting, I had the privilege to brief FM at Raj Bhavan in the presence of Zantye, about the issues involved and how the High Court decision would be unjust to Goans who are honest and law-abiding citizens. Hardly any congressmen turned up to pay even courtesy visit as he was considered a political light weight. He was convinced about our case and was favorably inclined to redress the grievances of Goans. For this I and two of my fellow colleagues had to follow up with CBDT Chairman, Law Secretary and Finance Ministry officials to make suitable amendment in the Income Tax Act with visits to North Block, New Delhi, just before the Budget session accompanied by MP Zantye who ensured that we had easy access to these authorities. Ultimately this resulted in bringing new section 5A in Statute by Finance Act of 1994 with retrospective effect from 1-4-1963. 

Here it is worthwhile to know personality of H Zantye who facilitated this because of his special relationship with the FM. 

Harish Zantye (MLA Pravin’s father) popularly known as ‘Anna’ belongs to famous Zantye Cashew Family of Bicholim but his passion was with film industry, film distribution, social work and politics. He had endeared himself in Parliament House with his charming personality and generous distribution of best quality Zantye cashew nuts, bag-loads of which he would carry during his regular weekly flights to New Delhi to attend Parliament sessions. He was known as ‘Kajuwala’ to Parlamentarians. Hardly any knew his real name. He pestered Finance Minister for inauguration of a new branch of Bicholim Urban Bank and virtually dragged him to Goa immediately after Parliament was adjourned and in the process, developed close loving bonds with FM culminating in his visit to Goa.

Every generation of Goans should be grateful to Harish N Prabhu Zantye, ex- MP of North- Goa who is now 85 years of age, the CA fraternity and Providence for the perpetual bounty   bestowed on them through section 5A. ‘Anna’ showed to us the true power of an MP. 

Those who are governed under this section, can file tax return anywhere in India and tax return has special fields for declaration.