Increase Income Tax Slab, Section 80C & Section 80TTA deduction

Tax Bar Association made a Pre Budget Memorandum to Finance Minister and requested for increase in Income Tax Slab Rate, Increase Exemption Limit of Income of Minor, Increase Section 44ADA Thrash-hold limit, Increase Section 80C and Section 80TTA limit etc. Text of the Pre Budget Memorandum is as follows:-

Dated: January 18, 2020

To

Hon’ble Finance Minister
Govt. of India
New Delhi

Respected Madam,

Sub: Pre Budget Memorandum.

Tax Bar Association, Guwahati is a prestigious professional association having membership strength of 450 members consisting of Chartered Accountants, Company Secretaries, Cost Accountants, Advocates and Tax Consultants.

We are pleased to forward hereunder our Pre Budget Memorandum for your kind consideration.

A) REVISION IN TAX RATES

A person earning upto Rs 10 lacs is a middle class person only. After, maintaining his family and providing for his children education, he can save around Rs 2 lacs, for his health and old age time. Therefore, we suggest that the income tax slab and rates of income tax should be:

Income slab	Rate of Tax
Upto Rs. 5,00,000	NIL
Rs. 5,00,000 to Rs. 10,00,000	10%
Rs. 10,00,000 to Rs. 25,00,000	20%
Rs. 25,00,000 and above	30%

These rates will lead to higher compliance level. Also, there will be more disposable income in the hands of the tax payers, which will lead to higher spending, thereby boosting the economy.

B) EXEMPT INCOME

Sec 10(32): LIMIT OF MINORS INCOME: The exemptions limit for each minor’s income at Rs 1,500/- is very less. It is suggested that the said limit be increased to Rs 10,000/- for each minor child in order to bring it to today’s price levels.

C) COMPUTATION OF TOTAL INCOME

1) 44ADA –THRESHOLD LIMIT INCREASE

For availing presumptive scheme of taxation, only professionals having gross receipts of Rs .50 Lacs per annum is covered. It is suggested that the said limit be increased to Rs. 75 Lakhs. This will allow greater participation of professionals in the scheme of presumptive taxation.

2) ALLOWING LLP’S TO TAKE THE BENEFIT OF SEC 44AD

Section 44AD relating to presumptive taxation applies only to businesses run by resident Individuals, HUF and Firms excluding LLP. The benefit of section 44AD should also be made available to LLP.

3) 44ADA- ESTIMATED INCOME PERCENTAGE TO BE LOWERED FROM 50% TO 35%

Professionals have high cost in maintaining their practice. They have to spend money on knowledge update, travel and hire high cost skilled assistants. With 50% estimated income, large numbers of professionals are not choosing the presumptive scheme. Therefore, the presumptive profit percentage of 50% is very high and it should be reduced to 35%. This will increase the acceptability of this scheme among professionals.

4) TIME AND INVESTMENT LIMIT FOR INVESTING IN 54EC BE INCREASED

At present the taxpayers get time limit of 6 months from the date of transfer for investment in specified bonds. We suggest amending section 54EC so that time limit for investment in specified bonds may be allowed up to the due date of filing of ITR. Also, considering the inflationary conditions in the economy, we further suggest that the said limit of Rs. 50 Lakhs may be raised to Rs. 1 crore.

5) INCOME DISCLOSURE AND COMPUTATION STANDARDS

Disclosure and calculation of figures for filing details of Income Disclosure and Computation standards is causing great deal of compliance problems to small assessee’s and small practitioners. We suggest that this provision should be dropped for all assesses with turnover of less than Rs. 25 Crores.

D) RETURN FILING

1) STAGGERED DUE DATE OF FILING RETURN FOR SALARY/ NON AUDIT CASES U/S SEC 139(1)

The due date for filing return for non audit business/salary cases should be fixed in a staggered manner, so that filing is smooth, it is suggested the following timeline for filing returns should be made.

Assessee Type	Due date of Filing Returns
Non Business Returns	July
Assesse, having business Income but not required to get their accounts audited under any law	August
Company	September
Non Company assesses required to get their accounts audited under any law	October

2) PERIOD FOR RESPONDING TO NOTICE U/S 139(9) DEFECTIVE RETURN MAY BE INCREASED

With returns being processed at CPC, large numbers of defective return notices are being received by assessees. The points raised in the notice needs to be studied and discussed by the assessse’s with their tax consultants, and then only response can be given. Most of the tax practitioners are nowadays bogged down due to multiple compliance requirements under Income Tax, GST and Companies Act. Hence, the time to understand and respond to such notices within 15 days is too short. Hence, request is being made to increase the period to respond notice u/s 139(9) from 15 days to 30 days.

3) NO LATE FEE FOR FILING RETURN UP TO 31ST DECEMBER U/S 234F

At present, late fee is levied u/s 234F on filing of return beyond due date. We suggest that no late fee be imposed for returns filed upto 31^st December as the assesees and tax practitioners are overburdened due to various compliances under GST and other Acts. Further, we also suggest reduction in Late filing fee from Rs. 10,000 to Rs. 5,000/- for returns filed from 1st Jan to 31st March.

E) DEDUCTIONS

1) SEC 80 C LIMIT TO BE INCREASED FROM RS. 1,50,000/- TO RS. 2,50,000/-

In order to encourage savings and to plough back the savings for country’s growth, the existing limit of Rs. 1,50,000/ may be raised to Rs. 2,50,000/-. The additional benefit of Rs 50,000/- while investing in National Pension Scheme should continue.

2) SEC 80TTA LIMIT TO BE RAISED

In order to encourage tax payers to park their money in bank, and to stop hoarding cash, it is suggested that deduction limit of interest earned on savings bank account be increased from Rs. 10,000/- to Rs. 20,000/-.

F) TAX DEDUCTION AT SOURCE

1) SECTION 194J – FEES FOR PROFESSIONAL OR TECHNICAL SERVICES

It is suggested that the limit of deduction for fees paid for professional or technical services should be increased from Rs. 30,000/- to Rs. 50,000/-.

For Tax Bar Association
CA Gopal Singhania President Ph- 93650-09126, 98640-95646	CA. Somesh Bose Direct Taxes Committee Chairman Ph : 94351-11678

Copy to :

1) Prime Minister’s Office, New Delhi

2) Hon’ble Minister of State for Finance, Govt. of India, New Delhi

3) The Revenue Secretary, Govt. of India, New Delhi

4) The Dept. of Revenue, Ministry of Finance, Govt. of India, New Delhi

5) The Chairman & Members of Central Board of Direct Taxes