There is no respite from continuing inflation in Union Budget 2011-12as the Budget provides for additional service tax on hotel accommodation above Rs.1,000 per day, A/C restaurants serving liquor, some category of hospitals, diagnostic tests, and on air travel both domestic and international is raised. Also Nominal Central Excise Duty of 1 per cent imposed on 130 items entering in the tax net, as such whatever little relief is there on income tax that will be offset by an increase in other essential items. The total net purchasing power with middle class especially shall be much lower than pre budget provisions. Yes, the Union Budget 2011 is definitely inflationary for Aam aadmi. Middle class shall become poor class!
On income tax front –the basic exemption limit in the case of individual taxpayers is raised by Rs.20, 000 (from Rs.160000 to Rs.180000) which is negligible as inflation is too much and it is proving beyond the control of government. However, rightly much awaited qualifying age of senior citizens is lowered from 65 years to 60 years with an increase of Rs. 10,000 (from Rs.240000 to Rs.250000) to the current exemption limit. Though a higher exemption limit of Rs. 500000 to very senior citizens above the age of 80 years is welcome but it is better if they are totally exempt from income tax .Though politicians never retire but ordinary citizens of 70 years and above must retire from filing of their income tax returns!
The Deduction for investment in long-term infrastructure bonds up to Rs. 20,000 under section 80CCF is extended to one more year. This amount is too low and must be raised to Rs.50, 000.
The salaried tax payers shall not be required to file their income tax returns if the entire tax liability is discharged by the employer through deduction of tax at source is a welcome step. Is that mean Employers shall act like Income Tax Officers-for their employees at least? But real implications shall be known only when such a scheme shall be notified.
Tax Deduction at Source: TDS limit should be increased by five- six times of the present limit. However, the limit for interest on bank deposit remains at Rs.10, 000, it must be raised to Rs. 20,000 and for Professional incomes enhance it from Rs.30, 000 to Rs.50, 000.
To simplify the tax matters Surcharge and Education Cess, Minimum Alternate Tax
and wealth tax must be abolished.
Deadlines: IT Department must be given strict deadlines for each process. For example, Assessment Orders and Refunds must be issued within three months of filing returns.
Administrative Reforms: The CBDT will provide a separate web-based facility to enable a direct, stand-alone interfacee for taxpayers with the Income Tax Department so that they can report and track the resolution of their refunds and credit for prepaid taxes. Add here that all refunds due not received by all assessees shall be promptly paid –fix statutorily last date say by June 2011. Any tax payer can claim his/her refund due with simple application on line –giving required details –scanned copies of TDS certificates etc if such an information is not available in Form 26AS –TDS statement with IT Department. Further, such a claim of refund must be processed and send by ECS only. There should be no requirement in person with IT staff for obvious reasons. This should be monitored by CITs as CC of such claim must be send to CITs through E-mails as must be provided by IT Department.
Also it is the need of the time to Reduce Scrutiny time for issuance and completion of assessments.
M. Com., LL.B., FCA, FICWA, FCS
Ex –Member: AMIMA, AMIBM, ACEA (London), MIIA (U.S.A.)
Phone: 2686 8147
B-49, Gulmohar Park,
New Delhi-110 049