Budget 2014-15: Expectations by

Individual Tax Payers

Great big hope and expectations are expected
particularly by individual tax payers of India as
after a long time they are expecting in the
new budget 2014-15 some great relief !ere are
some of the important suggestions which we
would li"e the #inance $inister to consider while
presenting his maiden budget specially "eeping in
view the expectations of the individual tax
payers %-
ll taxes except inco!e-tax s"ould be abolis"ed
&he individual tax payer not only ma"es payment of income-tax but they
have also to deposit two types of education cesses 'i"ewise( in certain cases
surcharge is also payable &he previous Government was also thin"ing of
increasing the tax slab for persons having one crore and above income )ell
the aim of the Government should be to ensure that the life is easy and
simple for the individual tax payers #or this purpose( di*erent types of taxes
are re+uired to be abolished
If the Government wants to improve the stoc" mar"et( then it should also
abolish ,ecurities &ransaction &ax It is( therefore( thought that abolition
of ,ecurities &ransaction &ax would mean revenue loss but the said revenue
loss can be made up by bringing into the tax law simpli-cation and
rationali.ation so that tax payers ma"e payment for their taxes with a smile
/ven if the 0ividend 0istribution &ax 1 $2& are abolished then big boom
expected in trade and industry
#crap $lubbing Provisions
3resently under the Income-tax 'aw if the husband were to ma"e a gift to his
spouse( then the income from the gifted amount will be clubbed with the
income of the spouse &his has been the law ever since 1451 when
theIncome-tax 2ct was prepared !owever( this provision of the law is
arbitrary and without any basis &he law should also provide some minimum
amount every year which the husband can pay to his wife based on a certain
percentage of his income Is it not strange to "now that in case a person
were to ma"e a gift of let us say of 6s 5 la"hs to his wife and she invests in
the 7an" #ixed 0eposit and receives yearly interest of 6s 50(000( then the
income from 7an" interest will be added to the income of the husband
!owever( if there would arise a divorce amongst husband and wife and the
husband is re+uired to give away 50 per cent of his assets to his wife( then
as per the present law of income-tax there will not be any clubbing of
income
&he #inance $inister should sympathetically consider the above factor into
more realistic and practical manner and should provide through the budget
some portion of the amount which will not be clubbed on ma"ing the gift to
the spouse If this provision is not implemented( then tax payers would be
forced to thin" that income-tax law is only comprising of illogical tax
provision &he law should also provide for higher exemption of clubbing
provisions specially for minor child because the present exemption of
clubbing of the income of the minor child is only 6s 1(500 per annum per
child &his -gure is exceptionally unrealistic and hence( the same is re+uired
to be substantially increased which we expect the #inance $inister to
increase in this year8s budget
Tax #ops %or #alaried E!ployees
&he salaried employees in particular face big problem specially due to
in9ation and rise in the cost of living In last one decade no realistic and
practical proposals have been introduced in the budget which are bene-cial
for the salaried employees in particular #or example( even now the
maximum amount of transport allowance that is exempted for the salaried
employees is only 6s :00 per month !owever( if we see realistically the
situation( we -nd that in many cases the actual amount spent on commuting
from o;ce to residence and residence to o;ce is as higher as 6s 200 per
day !ence( the exemption for transport allowance should be increased in a
realistic manner
'i"ewise( the exemption under the law is provided in respect of
reimbursement of medical expenses to the extent of 6s 15(000 per annum
only In last one decade the cost of medical treatment has substantially gone
up and this is also a very well "now fact !ence( the deduction in respect of
reimbursement of medical expenses should be enhanced &he <hildren
/ducation 2llowance exempted for employees is 6s 100 pm only 'i"ewise(
the present law provides for exemption in respect of 'eave &ravel <oncession
twice in a bloc" of four years 7ut the same should( however( be extended to
once every year so that the salaried employees can get bene-t in respect of
leave availed by them 0eduction even for hotel expenses should be allowed
and expenses for foreign trip should be part of eligible expenses to be
allowed
&he standard deduction from salary income which was available for decades
is not available now !ence( =ust li"erental income a certain percentage
should be allowed to be deducted by the salaried employees and for this
purpose standard deduction should be granted $oreover( a number of
salaried employees face the problem of deduction in respect of payment of
house rent allowance to the landlord who does dies not issue them rent
receipt and does not provide his permanent 2ccount >umber( thus( causing
problems to the salaried employees ,ome solution should be thought by the
#$ on this front
?ne very important point which the !onourable #inance $inister should
consider is that the tax treatment of per+uisites for salaried employees
should be at par for all categories of employees namely there should be
same set of rules for computation of per+uisites for private employees as
well as for government sector employees and also for the ministers and
others It is hoped that the Government will consider this aspect very
seriously because on logic and on principles of e+uality the same concept
should be adopted for per+uisite valuation without any distinction between
all employees whether private sector or public sector or government sector
Increase in deduction %or interest on &ousing 'oan
#or the last many number of years interest on housing loan is allowed
deduction to the extent of 6s 1(50(000 It is a well "nown fact that prices of
the residential properties have gone up substantially in last one decade
!ence( the Government should thin" of increasing the deduction for interest
on housing loan from 6s 1(50(000 to minimum 6s 2(50(000 &his will help
individual tax payers to buy residential houses and thereby decrease the
burden of the Government in providing residential houses
Increase in deduction %or invest!ent
&he maximum deduction which is allowed to individual tax payers under
section :0< has been limited to 6s 1 la"h only It has remained unaltered for
the last many years &o encourage savings and investment the Government
should thin" of increasing this deduction &he Government should also ma"e
it clear that if the limit of deduction under section :0< is increased( it will
bring encouragement individual tax payers to save more for the rainy day
>ow( if more savings are made by the tax payers( then surely in the years to
come the Government will be less dependent on providing facilities and
expenses for old age in the years to come
!ence( I would li"e to suggest the #inance $inister that the deduction of :0<
should be increased based on the income of the tax payers @ery reasonably
the limit should be up to 6s 1 la"h deduction for persons having income up
to 6s 5 la"hs &hereafter( the maximum deduction for :0< should be
increased upto 6s 2 la"hs where the income of the individual tax payer is
over 6s 5 la"hs and up to 6s 10 la"hs and -nally( the deduction under
section :0< should be increased to 6s A la"hs for all those individuals who
having income in excess of 6s 10 la"hs $oreover( the persons having
higher income would love to save more !ence( they should be encouraged
with higher deduction in terms of section :0< so that they save more money
for their golden years &he deduction for medical insurance policy etc may
be enhanced with section :0< deduction so that the life is hassle free
Increase in deduction %or (ent Pay!ent
3resently persons not owning a residential house property and also not
getting any accommodation or house rent allowance from their employers(
they are re+uired to ma"e payment of rent for their residential
accommodation from their own poc"et !owever( section :0GG of the
Income-tax 2ct provides for a deduction for rent payment e+ual to 25 per
cent of the income sub=ect to maximum of 6s 2(000 per month only &he
upper side of deduction was -xed by the Government long time bac" and
hence( realistic deduction should be permissible in view of the in9ation &he
best option( however( will be that let Government delete the upper limit of
this deduction and only restrict the deduction e+ual to 25 per cent of the
income of the assessee
Ti!e to scrap )ealt"-tax
@ery few tax payers of India pay wealth-tax It is time for the Government to
consider scrapping the )ealth-tax because revenue impact is not (much and
moreover( there would be la"hs and la"hs of people who as per the
present )ealth-tax 'aw are re+uired to pay )ealth-tax 7ut the fact is that
they are really not ma"ing payment of the )ealth-tax 6ather the fact
remains that due to levy of )ealth-tax many tax payers are engaged into
blac" money transactions It is expected that with the abolition of
)ealth-tax( blac" money transactions will be chec"ed and the Government
will be able to have better control over reducing the blac" money
transactions
Big *o to In"eritance Tax
,ome of the economists have suggested to the #inance $inister to
levy Inheritance &ax )hile this type of thin"ing should not at all be accepted
by the #inance $inistry specially in view of the fact that once upon a time
when India had the concept of payment of /state 0uty and due to /state
0uty payment there was very heavy tax evasion but once the /state 0uty
was scrapped in the year 14:5( we have started witnessing decline in blac"
money transactions !ence( the Government should not at all thin" of
re-introducing Inheritance &ax in some form or the other &he clear cut
thin"ing of the Government should be that the +uality of the life of the tax
payers should be enhanced and that the tax payers should not have much
hassles and tension and problems concerning income-tax payment If this
small little care is ta"en( surely it is expected that people will start paying tax
with a smile
(ationalisation o% t"e Provisions o% $apital +ains
&he ,hort-term <apital Gains from shares was earlier taxed at 10 per cent
only &hus( now the Government should tax the ,hort-term Gains at 10 per
cent and not 15 per cent 7esides( there should be clarity with regard to
di*erent types of income earning activities from the ,toc" $ar"et( Intra 0ay
&ransactions and income from #utures and ?ptions 2 large number of
salaried employees are ma"ing payment on income-tax on ,hort-term
<apital Gains and even it is seem that due to tax complications the individual
tax payers do not declare many types of incomes from stoc" mar"et In case
all the transactions from the stoc" mar"et are =ust taxed as long B term or
short B term capital gain I feel the life of the tax payer would be more easy
and it is expected that the tax payers will pay higher amount of income-tax
on their stoc" mar"et related activities
&he Income-tax 6eturn #orm should also be simpli-ed #or example( when a
salaried employee -nds that with his little income from futures and options(
he is frustrated as he is re+uired to -ll up very long Income-tax 6eturn #orm
>o I&64 &hus( the &ax laws should be made so simple that computing
income from ,toc" $ar"et etc does not cause a big problem and wastage of
time for the individual tax payers &he time limit for 'ong-term and
,hort-term <apital Gains should be the same for 6eal /state &ransactions as
well as the ,toc" $ar"et &ransactions
Tax #ops %or &ousing #ector
&he provisions of capital gains specially for housing sector should be
revamped to provide for special e+uitable tax provisions for investment in
real estate sector to save capital gains with unlimited investments in
residential properties to save capital gains tax and at par tax provisions for
long term and short term capital gains on real estate with the capital gains in
respect of stoc" mar"et transactions
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