Pankaj Sibal

Pankaj Sibal1. Re-introduction of Standard Deduction to Salaried / Pensioner Income Tax Payees.

As is being pronounced from time-to-time by the Hon’ble Minister of Finance Mr. Arun Jaitely that the present government believes in having more money in to the hands of tax payee to enable them spend more, which will ultimately be benefitted to the Indian Industry in whole.

1. As you know very well that the Industry Owner never retires so long he/she wishes.

2. The partners in any firm never retires so long he/she wishes.

3. The politicians hardly have any retirement age unless he/she wishes.

4. The Professionals never retires so long as he/she wishes or are incapable for earnings.

5. But the Salaried Class Employees / Tax payees retires at the age of 58/60/62/65/70 years depending on their professional skills and employment conditions.

All the above except the last one Salaried Class Tax payees, enjoys liberal perquisites for disposal at their hands including free medical benefits, conveyance / car & its running / maintenance expenditure + depreciation etc. etc. The present exemption of conveyance allowance @ Rs.1,600/- per month to the salaried / pensioner class tax payees given, has been termed as insufficient to the price index, this amount is now a days minimum parking charges for a 2 wheeler for a month. In Metro cities now a days a person incurs minimum of Rs.100/- per day for commuting to earn his/her lively hood, if travels in public transport from his / her residence to the place of work for earning. Where ever, there are Metros, the expense on conveyance is more, since he/she has to travel with multi-mode transport, i.e. from residence to bus stand – to metro station and from metro station to place of work with bus – auto / rickshaw etc. etc.

In India, an un-organized private sector have more percentage than the public sector / government owned employment and organized private sector where there are retirement benefits are more, the workforce in private un-organized sector have far more than the Government / public sector employment. So the majority of population have more employment in private un-organized sector where there are no benefits, or are very much less benefits available.

The present benefits allocated are much more less than the daily needs of a person after retirement. There remains no job security in private un-organized sector, besides there are more unpaid wages to the employees and the same can be judged from the pending cases with Labor Courts and or office of the labor commissioners , since these sector is the most deprived.

A Couple of years ago, the Salaried Class Tax payees were given benefit of standard deduction of one-3rd or maximum of Rs.1-00 lac a year from their yearly earnings of salary / pension Income and the Tax were so reduced from their earnings. But the UPA government withdraw the same giving much more hardship to the salaried class tax payees.

If the same is reintroduced in the budget 2016-17, will be a boon to the salaried tax payers, and the same will be justified action on the part of government in comparison to the other non-salaried tax payee who have been benefitted of the lower tax liabilities on a/c of enjoying the rebates as mentioned above.

2. Enhancement of deduction u/s 80C to Income Tax Payees from present Rs.1-50 lac / Rs.2.00 lac to Rs.3-00 lac, if not Rs.5-00 lac a year.

The present rebate on a/c of savings made u/s 80 © which is @ Rs.1.50 lac a year is too low comparing to the price escalation, higher expenditure being incurred on exorbitant fees being paid by the parents on the education at private schools, colleges and for higher education, including interest on loan for higher education .

Since the treatment on self, family members too is being escalated on a/c higher cost of medication, hospital and medical investigation charges.

To give boost to auto industry, and to meet the need of middle class citizen for their daily commuting, it is very much necessary that they must have their own vehicle, and if the interest on loan for purchase of vehicle i.e. 2 or/ & 4 wheeler is given rebate in income tax, it will overall bring smile on the faces of tax payees, banks financial investment industry and auto industry besides, dealers / providing services of repair & maintenance, besides the same will generate more employment in the country.

The banking FDRs, if brought to par with Mutual Fund industry to have tax rebate on FDRs with block in period of 3 years will boost investment in banks, but the same needs to be having facilities of overdraft / loan on pledged FDRs so invested under 80 ©. Besides the investment on FDRs, the interest accrued on all the FDRs be given rebate under this section.

3. Enhancement of deduction u/s 24 to Income Tax Payees from present Rs.2-00 lac to Rs.3-00, if not Rs.5-00 lac a year.

A middle class income group / tax payee i.e. small business persons, private unorganized employee / salaried class and self-employed citizens, are hardly in a position to acquire a home to live in their whole life time. And if the government enhances the rebate, it will be beneficial to the middle class citizens, banking / financial investment industry, builders, building material suppliers, transport and business community, besides it will generate more employment.

4. Re-introduction of tax rebate on savings under Infrastructure Fund.

Since the present government has taken ambitious plans for the development of Infrastructure in the country, the government needs more and more funds for the same. To meet with these funds the government must reintroduce Infrastructure Bonds, and if the tax rebate of savings made in Infrastructure Bonds and interest on the same in given rebate in Income Tax to Individual, HUFs, proprietorship, partnership funds, Companies and PSUs, the government will be more at ease of funds.

5. Enhancement of savings u/s 80CCG – Rajiv Gandhi Equity Scheme.

The savings rebate under this scheme was allowed for three years only and the same needs to be re-introduced with enhancement of amount to 5 years which will be beneficial to the mutual fund industry as well besides, tax payees. The investment limit also needs to be enhanced from Rs.50 thousands to Rs.1-00 lac a year, besides the tax rebate for the persons up to Income of Rs.12-00 be enhanced to persons with Income of Rs.20-00 lac a year.

6. Enhancement of tax rebate u/s 80D.

To meet with the price escalation on medical treatments, medical investigations, hospitalization expenses, the present limit of Rs.30,000/- needs to be enhanced to Rs.50,000/- a year at-least.

7. Inclusion of repayment of Education loan instalments in tax rebate u/s 80E.

The present rebate of Interest on Education loan is completely exempted from Income, but if the same is included of instalment on education loan i.e. EMI, will be beneficial to the tax payees, Banks / financial institutions, education industry and the business class dealing in education business, i.e. publishers, stationery industry, dealers, transport industry etc. etc. And the more citizens will opt for higher education, which will ultimately prove to be beneficial to the nation and per capital income of the individual will also be increased, mean more revenue generation to the nation, and more employment ability.

8. Enhancement of tax rebate u/s 80GG.

The present limit 25% of income or maximum of Rs.24,000/- a year is deductible since long time on the rent paid but no HRA is being received by a salaried person is too low comparing to the escalating prices of house rents, the enhancement to Rs.1-50 lac a year will be quite justified to the middle class salaried earners.

9. Enhancement in Basic Tax Free Income Limit.

a. The present limit of tax free income up to Rs.2-00 lac a year is too low looking to the price escalation of the essential commodities, need not to go with the price index as is being published, but to see if the prices of vegetables, oil, ghee, milk and groceries, children’s school fees, transportation etc. increased or decreased. Looking to the said criteria, the basic exemption of tax free income needs to be raised to at-least Rs.3-00 lac if not Rs.5-00 lac a year.

b. There needs to be looked in to the yearly Tax free Income of Senior Citizens above the age of 60 years and very senior citizen be needs to be treated equal, since very few, say only rich very senior citizens are in the income tax bracket, rest all are retired from middle class category tax payees.

Likewise the above, the present tax slabs needs to be looked into changes.

c. Personal Taxation: Income Tax for Income up-to Rs.25-00 lac needs to be charged @5%, Income Tax for Income up-to Rs.50-00 lac needs to be charged @15%, Income Tax for Income up-to Rs.100-00 lac needs to be charged @25%, Income Tax for Income up-to Rs.10-00 crores needs to be charged @35% and Income Tax for Income above Rs.10-00 crore be needs to be charged @40% yearly. For Individuals, HUFs, proprietor ship and partnership firms. The present surcharge needs to be withdrawn.

The personal taxation should not be more than corporate taxes.

10. Increase in employment generation at rural areas.

To reduce the inflow of rural pollution towards metro cities, the employment generating steps needs to be taken on fast track. For these the government needs to take steps to establish self-employed persons, house-hold industry, small industry, medium industry and large industry including educational institutes of primary, middle and higher levels at concessional rates of land, commercial space, investment allowance on plant & machinery, land & building etc., easy finance facilities at concessional rates, electricity and water at subsidised rates for first say 5 years at full and thereby reduced to half for next 5 years, the concession so granted is subject to earnings thru banks only so as to avoid dubious transactions, these will not only have products available in the market at low price, but will generate more employment avenues to the local people and the inflow of rural population to the nearby cities of class C, B, A and metros will be reduced. The united family values will remain there instead of nuclear families and thereby the growth of new generation of children will be more focussed on family values and thereby reducing the stress level and will also be economical for them.

I, do hope that the above suggestions will definitely attract the immediate attention of the Hon’ble Finance Minister, and will be considered favourably, before the announcement of the Budget for 2016-17, and will not be under wrap for a month, as is being in place in each department of local, state and central governments.

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Category : Income Tax (20858)
Type : Articles (10788)
Tags : Budget 2016 (434) Budget Common Man (20)
  • VINOD

    EVERYBODY WANTS FEW MORE DISCOUNTS/BENEFITS SO THAT THEY DONOT HAVE TO PAY TAX/LESS TAX. ALL ARE LOOKING FROM THEIR OWN ANGLE. TRY TO UNDERSTAND FROM GOVERNMENT POINT OF VIEW. GOVERNMENT HAS TO GIVE MONIES FOR VARIOUS ITEMS LIKE SALARIES TO ITS EMPLOYEES IN VARIOUS ESTABLISHMENTS LIKE ADMINSTRATION, INCOMETAX/EXCISE/CUSTOM/SERVICE TAX/DEFENCE SECTOR/RAILWAYS ETC. LIST IS VERY LONG. THERE IS HUGE EXPENDITURE ON SANSAD/VIDHANSABHA AND SUCH OTHER INSTITUTION. THAN LOT OF INVESTMENT IN INFRASTRUCTUDRE AREA IS BEING DONE. THIS REQUIRE CRORES AND CRORES, FROM WHERE WILL GOVERNMENT BRING FUNDS.
    YES, GOVERNMENT CAN INCREASE ITS TAX BASE BY BRINGING MORE PEOPLE IN IT. GOVERNMENT KNOWS WHERE TAXES ARE NOT BEING TAPPED. SIMPL8IFICATION AND RATIONALISATION OF TAX STRUCTURE WILL PAY IN LONG RUN. DR, MANMOHAN’S 1400/- POLICY CAN BE A GOOD EXAMPLE. LACS OF TRADERS WAS BROUGHT IN NET DURING 90s. OTHERWISE IT WAS NOT POSSIBLE TO NET SO MANY PEOPLE AT ONE TIME. UPTO 10 LAC TAX SHOULD NOT BE MORE THAN 12%. AND UPTO 25 LACS IT SHOULD BE UPTO 22%. FOR SERVICE TAX THRESHOLD LIMIT SHOULD BE 2500000. THESE ARE THE FIVE EXAMPLES . GOVERNMENT HAVE VERY INTELIGENT MANPOWER. LISTEN THEM.

  • CA. Subhash Chandra Podder

    Basic exemption may likely to increase from 2.50 to Rs 3.00 Lac, below the age 60 years and Rs 3.00Lacto Rs 3.50 Lacs. Nothing more than that.