Weird rules spoil the game

More often than not, we as a country prefer to have a plethora of rules. Exemptions, special situations and sub clauses are the norm. We truly have spaghetti - like laws (and I don't mean that they are yummy!), income tax rules, excise duties and what not.

A prime example of this is the Coal India IPO. If one had applied for shares worth Rs 100,000 (the maximum amount under the 'Retail' category), one would have got shares worth approximately Rs 46,000. However, if one had applied for shares worth Rs 100,001, one would have got shares worth Rs. 5,000! Rules such as this, while meant to protect the elusive 'small investor' just make it mandatory for people to game the system and apply all sorts of means (like applying as a retail guy even though I'm actually a HNI through other peoples' names or 'renting' demat accounts for hot IPOs) to maximize economic benefits. Rupenben Panchal and her ilk proliferate in such a system. Such systems are always regressive, and it is high time we realized that we are all homo-economicus i.e. we respond to incentives.

We need to make rules simple and easy to understand. No one should be able to say - I need to pay mega$$$ tax since I made mega $$$ profits. However, applying sub-clause xii-b under section VII part ix of 1960 Companies Law as applicable in 21c Excise and Exports Amendment 1984, I can declare myself insolvent. Hence no tax.