ON May 4, a Picasso was sold for $106.5 million to an anonymous buyer

RELATED ARTICLES Budget may bring more services in tax net Withdraw customs duty, countervailing tax on coal imports Vodafone says India tax victory boosts IPO chances Don't raise taxes in budget; CII to govt Tax on diesel vehicles will stigmatise technology: SIAM

at Chris-tie’s in New York. It was a 1932 portrait of the Spanish master’s blonde mistress, known as the Nude, Green Leaves and Bust. It was an all-time record for a single piece of art. There was no demonstration at the auction venue against obscenity and nudity in art. No one demanded that Picasso be exiled to Malaga or Doha in the mistaken belief that the painter was still alive. Taxmen did not line up to collect import duties for an “undervalued” Spanish product “smuggled” via Paris. No one slapped notices for VAT amounting to nearly $13 million. But some of these are realistic scenarios if you switched the venue of this auction to India.

When an industrialist bought the sword of Tipu Sultan in a London auction in 2003 and brought it back to India with great fanfare, all import duties were waived off by the finance minister. I have a friend in London who has an impressive collection of Jamini Roys. If he decides to return to Kolkata and wants to bring his collection back with him to its country of origin, he would have to contend with customs officials unless he obtains the same dispensation.

According to certain estimates, the business of art in India has probably touched $1 billion a year if one included all cross-border transactions. But a large part of this value is hidden in the parallel economy and much of the “trading” is conducted under the fiscal radar.

Indian artists and painters are becoming more prominent and coveted in the global art bazaar. High net worth individuals in India now have the urge of sourcing art from across the globe. Therefore, a thoughtful and sensible approach must be formulated by India.

Last month, the Ficci Committee on Art and Business of Art under the astute chairpersonship of Rakhi Sarkar released a report titled ‘Art Industry in India: Policy Recommendations’. One of the key recommendations of the committee was: the ministry of culture (which is directly under the prime minister) should craft and publish a National Art Policy in consultation with all stakeholders, which would include artists, industry, galleries, traders, collectors and buyers of art. A core objective of this policy should be the radical reduction of bureaucratic red tape. There is a compelling case for simplifying procedures and streamlining the regulatory requirements to ensure that artists, art galleries and other stakeholders have a reduced number of touch points with government departments.

The dice of the tax regime is loaded against the blossoming artists. Artists generally experience variations in their income levels due to irregular sale patterns. This fluctuation of income between tax years can be adverse for artists due to the progressive slab rates applying to individuals, which impose higher tax rates as taxable income increases. To adjust the income fluctuations that artists experience, one of the recommendations is to amend the tax laws and the artists to have an income-averaging concept. This concept prevails in Australia, Germany and other countries.

Corporate philanthropy is encouraged in many other countries such as Australia and the US. Corporate establishments contribute voluntarily to the art sector. The government should consider allowing a full expense deduction for the amount of donation made for the cause of art. It has also recommended the exemption from basic customs duty on import of all types of works of art. The once-profitable business of gold smuggling was destroyed by the drastic reduction of import duties on gold. The arbitrage became so small that the risks made the business of smuggling gold unviable. The committee has suggested a uniform VAT rate for art at 1 per cent across states. This will take away the incentive of keeping the art trade in the parallel economy.

The right to freedom of speech and expression to artists is guaranteed under Article 19 (1) (a) of the constitution of India. Clear procedures, processes and standards must be laid down to protect them from reckless allegations of obscenity and of being anti-national. Hooligans cannot be allowed to take law into their own hands. Summons to the artist or issue of warrant of arrest must be after due judicial scrutiny and balancing of interests.

Finally the artists who are at the heart of the value creation scarcely have a fair share. Middlemen and the collector, or investors, take most of it away. Is it possible to entitle artists to a reasonable percentage of the sale price on all subsequent re-sales for a specified number of years?

Vincent van Gogh died, by a self-inflicted single gunshot wound in his chest, miserably poor and lonely. In his entire life, Van Gogh sold only one painting Red Vineyard at Arles. In great agony he said, “I cannot change the fact that my paintings do not sell. But the time will come when people will realise that they are worth more than the value of the paints used in the picture.” If a law, such as the one I have just suggested existed, then Van Gogh may have lived longer, produced more masterpieces and, who knows, died a rich man surrounded by many friends.