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Now we have a new legislation called "Juvenile & Justice Act, 2015" replacing the JJ Act of 2000. In this new act, adoption has assumed a significant importance with an exclusive chapter. Subscribe and follow this blog for more information in the days to come.

Tuesday, October 23, 2007

Slide # 4

Extend "Adoption Tax Credit"

One of the reasons for the fewer number of adoptions in India is due to the costs involved to adopt a child. Abandoned/ relinquished child is placed in an adoption agency, that is according to CARA guidelines supposed to work as non-profit entity at no cost. Then for an adoption agency to turn around to charge the amount that rules out a common man from adopting with reasoning that they have expenses, strikes hard at the motive to run an adoption agency.

This is only half of the story. Other half is that one can justify showing the price guidelines of CARA to charge as much as they do. Now you know where the problem is.

Please take a look at this diagram below to understand what I am saying above:

  • CARA allowed maximum expenses to adopt a child in India is Rs.25, 200/-.
  • The horizontal line of the diagram represents the entire work force of India.
  • Minimum income required to adopt a child in India is Rs. 36, 000/-
  • Left end of the line represents an individual who makes per capita income of India, which is Rs.20, 734/-
  • Right end of the line represents high net worth individuals.
  • Midline across the horizontal line represents the minimum taxable income, that is Rs. 1,10,000/- (Approximately only 5% of the Indian work force pays personal income tax)

Basically 95% of the work force is burdened anywhere from 23% to 121% of annual gross income to adopt a child in India but they are non-taxpayers. Create a burden as high as this and expect a common man to adopt is next to impossible. This is economic discrimination against the 95% of the work force of India.

One solution to address this problem is to extend “Adoption Tax Credit”. Adoption tax credit must be extended to businesses (as a business expense) that in turn extend the same benefit to the desiring non-taxpaying families. Those that do pay taxes and don’t make as much, can be helped by extending adoption tax credit by including the adoption expenses under 80 C list of deductions. At the most, adoptive families will make use of such a credit once or twice in a lifetime.

I find the argument that adoption tax credit will devalue the child ridiculous because we are devaluing the child by paying to adopt in the first place. There’s an argument that adoption agencies have expenses to care for the child, so do the adoptive families and all that I am saying is that they do need help. Let’s give it to them and let’s give it in India’s best interests.

Ruby Nakka

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