Extract of FM Speech in Lok Sabha During Budget Discussion on Friday 18.07.2014

A defining moment against us, both to the domestic investors and international investors, was the idea of a retrospective tax. Any economy, which can enact a retrospective tax and say this applies 40 years earlier, destabilises businesses, and, therefore, the world was not willing to accept it.

When you say that it is your Budget, the retrospective tax mess was created by you. We have tried to substantially resolve the problem. The whole regime of tax terrorism where civility had to be added to it, the problem was created by you. How can the two be similar? So, as far as taxation is concerned, we have said that there will be no retrospective tax as far as the future is concerned. We have given a cushion that we would not tax people retrospectively creating fresh liabilities. We are trying to create an environment where GST be enabled in this country. We have taken a radical step by saying that the facility of advance ruling will be available when Indians invest in business in India. The non-residents were entitled to it.

There are not many occasions where the limit has been raised by Rs.50,000 even. My friend Dr. Shashi Tharoor is not here. He asked: “Why should it not be Rs.5 lakh?” I wish, his Party had done even half of it. But then this is the beginning.

One of my only regrets is that we do not have enough money in our pocket to make it to that figure. But it is not this alone. When I said that savings have come down from 33 per cent to 30 per cent, the 80C exemption being raised from Rs.1,00,000 to Rs.1,50,000, it is to encourage small tax payers and all tax payers to save more. When they deposit it in their savings, that money goes in for national development and infrastructure building. It goes into banks; it goes into provident fund; and it goes into several other securities. There also I have raised it by Rs.50,000.

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0 responses to “FM on Why tax exemption not raised to Rs. 5 Lakh?”

  1. s sudarshana says:

    Mr Nagaraj TV:
    The exemption given for savings u/s 80-C, 24-B are aimed at giving incentives to the assessee which ultimately helps him in the long runp; be it housing loan, PPF, Pension fund, Insurance etc. Usefulness of many of these will be known only after many years not withstanding the effect of inflation, purchasing power etc.

  2. Nagaraj T V says:

    23-07-2014
    Sir,
    The view given by you is wrong.

    A general threshold limit of Rs.5 lakhs for tax exemption is a good one.

    Because, due to inflation there is propensity is consume more than
    propensity to save. Income Tax act encourages savings. But due to
    inflation, forced savings will not do much good.

    Exemption without forced savings will help the tax payer to plan
    savings, expenses and investment. Tax administration will be easy.

    But who listen to our views?

  3. s sudarshana says:

    Mr.Subramanian,
    I was refering to the honest person whose income is salary. Babus getting corrupt money cannot be taxed for obvious reasons. Change should come from within and not from outside.

  4. satender says:

    we are registered in excise department as first stage dealer pls tell me can i jobwork from the manufacturing unit pls provided the ans.

  5. K C AGARWAL says:

    i support S SUNDARSHANA, IT IS THE HABIT OF POLITICIAN , WHO IS NOT IN THE RULLNG PARTY,SAY ANY THING , WHETHER IT IS POSSIBLE OR NOT. FOR EXAMPLE- DURING ELECTION, MANY POLITICIAN INCLUDING RAM DEO, HAD CRIED FOR BLACK MONEY, BUT SURPRISINGLY ,ANY PROPOSAL FOR BLACK MONEY HAS NOT MADE IN THE BUDGET, AND RAM DEO HAS FORGOTTEN BLACK MONEY

    K C AGARWAL

  6. satender says:

    sir,

    we are sending our material to 100% EOU unit against CT-3 Pls tell me what is the notification no and s.no. pls provide

  7. K C AGARWAL says:

    i support S SUNDARSHANA, IT IS THE HABIT OF POLITICIAN , WHO IS NOT IN THE RULLNG PARTY,SAY ANY THING , WHETHER IT IS POSSIBLE OR NOT. FOR EXAMPLE- DURING ELECTION, MANY POLITICIAN INCLUDING RAM DEO, HAD CRIED FOR BLACK MONEY, BUT SURPRISINGLY ,ANY PROPOSAL FOR BLACK MONEY HAS NOT MADE IN THE BUDGET, AND RAM DEO HAS FORGOTTEN BLACK MONEY

    K C AGARWAL

  8. S Subramanian says:

    I can not agree with Sudarshana that salaried class have no scope for dodging tax. A large portion of untaxed money earned by business people go into the hands of some or other salaried person (it is needless for me to mention how), and such money never gets reflected in the tax returns of the salaried class.

  9. Girish says:

    The Govt. should reconsider the reverse charge of service tax as this is not justifiable and even basic exemption limit is not applicable inthis. If we look into some service sectors we can see that there is indiscrimination. Eg. Services by a leagal practitioner. It has brought under reverse charge scheme, so certain class of clients will have to pay tax and need to file return, while advocates need not get worried about collection, remittance and filing of returns. CA, CS and CWA who are also in the same line of category (professional service) need to collect, remit, file return and face assessment from service tax authorities. We presume most of the finance ministers are advocates, hence given this priority to advocates.

  10. Girish says:

    As far as salary class is concerned, it is the time to increase the deduction for Conveyance/Transportation allowance, Education Allowance,etc. How can a person travel in the present situation for Rs.800/- a month or child can give education @ Rs.300 p.m. or accommodated in a Hostel for Rs.100/- a month? In the same way, the deduction for HRA should also be reconsidered in the present situation of high rent payable on housing.

  11. Ajaz Khan says:

    Dear PM?FM,
    Mr. S Sudarshana is right, where there is will there is way. At present only salaries persons are only paying most of the tax on their hard earned salaries where as business persons go scot free. Even if you take an example of pan vendor or batata vada shops sell then you can know how much he earns and how much tax is lost.
    I will not blame the government at present for increase in prices. Actually it was previous government’s fault for not increasing the controls and just giving subsidies making people think that there is no rise. When cost of properties are rising so the income of people should rise. If the present government want to earn revenue, first they should take control of irregularities occuring in reality sector where most of the money goes in black (about 50 to 60 % which is paid in cash).
    Most of the buildings which are non regularized due to different causes can be regularized if they are with all the norms or to be redeveloped with government control and with partnership wherever possible. All the street vendors should be put in mall like structure which can reduce garbage, provide better infrastructure and revenue to government with proper control. Remove licence control and keep only proper control and make the things competitive which will reduce inflation.
    There are so man things if you ask we can find which if they want I can write but it will take time.

  12. MUKESH says:

    80C exemption may be slab wise like as under

    up to salary 5 lakh 80c exemption 1.50 lakh
    from 5 lakh to 10 lac 80c exemption 2.50 lakh
    above 10 lavs it may be 3 lakh

    because investment depends upon salary and if salary will be more investment can be more and employee entertain more benefit of tax saving as well as more saving he can use in future.

  13. s sudarshana says:

    Fair enough! But how could he make a statement before becoming FM and in the runup of elections that it should be raised to 5.00 lakhs? This is just for argumentative purpose.
    It is sufficient if FM knows the non-salaried class of poeple dodge tax to a great (possible) extent and salaried class have no scope, even if they want to, to resort to avoidance of tax.
    If the govt. wants to raise its coffers, tap the resources, there are umpteen ways of doing. Where there is a will there is a way. People are watching the (Modi) govt for effective governance.

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