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Union Budget - I T simplification and aam aadmi ignored

Mahesh Kapasi 
on 21 July 2014

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Modi government’s first budget has belied the hopes of aam aadmi especially on Income Tax as an increase of Rs. 50,000 in exemption limit for individuals from Rs. 2 Lakhs to Rs. 2.5 Lakhs and Senior citizens from Rs. 2.5 Lakhs to Rs. 3 Lakhs is an eye wash-the inflationary trend of rising prices off sets the increase –even overall increase in necessary expenditure to live in is not met by a meager increased amount of Rs.50000 in the year. The exemption limit must be raised at least to Rs. 6 Lakhs for individuals.  The deduction for interest on housing loan for self occupied Houses (SOP) is rightly raised from Rs. 1.5 Lakhs to Rs. 2 Lakhs.

Filing of Income Tax returns is not simplified. It is quite complicatedTo simplify the filing of I-T returns, a simple one-page Saral form should have  been  reintroduced; it was applicable a few years ago, adding therein  Computation of income in a one-page format-including therein information about  total income and tax liability and taxes paid like TDS and advance tax and self-assessment. Prefilled forms are welcome but to add a column can be provided wherein proof of taxes paid but not reflected in Form 26AS can be uploaded. This can be verified directly by the I-T department and assessees saved from having to give proof. Returns can be processed this way and refunds due can be issued for it. This should be made applicable from the current assessment year.

SAHAJ OF NO PRACTICAL USE: The simple I T Form –SAHAJ has no practical utility as it cannot be filled if one has income from agriculture/ Exempt income in excess of Rs. 5000. This is ridiculous. Exempt income from Public Provident Fund (PPF) in most cases including for senior citizens is always more than Rs. 5000; also senior citizens having invested in shares more often get a sizeable amount of dividends –in most cases of prudent senior citizen investors would have exempt income of more than Rs.5000 from these two sources only, if such income is more than Rs. 5000 they are required to file Form No. 2 a lengthy one. It is suggested to do away with the criteria of income from agriculture/ Exempt income in excess of Rs. 5000 to fill and use SAHAJ form. Right now this form is of no use for the tax payers who can actually use it but for exempt income in excess of Rs.5000. Practically this form has no utility and is redundant!

Exemption limits under all sections for deductions etc are not raised suitably with present low value of Rupee.

Senior citizens problems are not minimized on the tax front.  There should not be any Tax deduction at Source by one and all senior citizens. The requirement of submitting form 15 H for income below taxable limits for no TDS must be done away. Their tax exemption limit must be raised to Rs. 10 Lakhs, there by abolishing Super senior citizens category  (80 years or above) or let their whole income be exempted from income tax.  Advance Tax must be abolished at least for all senior citizens including businessmen and professional. At present these category is not exempt.

With critical medical costs shooting up, it would have been better idea to raise the reimbursement of medical expenses from Rs15, 000 to Rs30, 000 and without the submission of medical bills; and it should be allowed to all assessees including self employed individuals.

It would have been a the best tribute to Defence personnel if not only salary/ pension but all the income being  made exempted from income tax and wealth tax to.

Tax Deduction at Source (TDS) on sale /purchase of immovable properties –which is Rs. 30 Lakhs, should have been abolished in toto. Why common citizens’ non business people should be made government’s agent for tax collections?

The Wealth tax is levied on the non productive assets-mainly which does not generate any income like house property etc of a taxpayer. How far it is justified to tax asset which has no income yield out it? That too has double taxation in the way as there is house-property-municipal taxes are levied  on it-without an yield of income – and when it is vacant it –not rented out it is taxable under Wealth Tax too  (if it exceeds taxable limits on its valuation –i.e., Rs.30 Lakhs total taxable  assets including market value of such a house) .

Also to minimise number of tax laws also, it would have been better to do away with Wealth Tax, otherwise also it is not yielding much revenue. Also MAT Tax must have been abolished.

The good point is enhancement of deduction limit of Rs. 1 lakh to Rs. 1.5 Lakhs under section 80 C-overall ceiling limit for small savings etc here; also raising Public Provident Fund (PPF) limit from Rs. 1 Lakh to Rs. 1.5 Lakhs; and re-introduction of Kisan Vikas Patra (KVP) - a popular scheme for even poor by which government too gets a substantial amount to utilize funds at lower rate of interest.

For industry –investment allowance is welcome. And for Power sector 10 years tax holiday is welcome as power is lifeline for everyone.

The Service Tax is applicable to all common citizens’ even small businessmen and traders etc are covered under it. Worst is Service Tax on rental properties above certain specified rental incomes –all services are taxable unless exempt –which are a very few. It has become a nuisance for common people-inflation is accelerated due to service tax as almost everything goes up in price. It is a ridicule tax. Income tax and service tax is duplication in taxation system. Exemption limit is too meager an amount-consider inflation and falling Rupee value. The basic service tax exemption is not touched which is too low an amount and is static for last many years. The rate of service tax is too high 12.36% initially it was 5% only. It must have been abolished.

The service tax on radio cabs is a jolt on middle class –those car owners of middle class who can opt for radio taxis shall be forced to use own cars resulting in pollution and congestion on roads and shall create more parking problems –this is a national loss.

The budget provides for cheaper LCD TV sets etc. With latest technology and research LCDs are out dated and had some technical problems and its production is almost nil. Perhaps government is not aware of this fact.

 At present all taxes do not affect politicians as, practically, all of them have immunity from paying correct taxes: witness cases where politicians have declared wealth amounting to Crores of rupees but the sources are never made public, nor do concerned departments make any effort to scrutinize this. But ordinary taxpayers, in similar cases, become tax evaders. Why this budget has not made filing of their tax returns compulsory even if they claim their incomes below taxable? (as that claim shall be only a false one).Also it would have been better that  all persons  contesting  any public position or elections to Lok Sabha, Rajya Sabha or assemblies etc the candidate must be a tax payer!

For overall national development budget is balanced ones especially care is taken for North Eastern part of country and backward States including Jammu & Kashmir. Sports are taken care of (Sports now are commercial venture too).

Taxes No returns to public:

No one minds paying taxes if one gets facilities to live comfortably .There are multiples taxes without any return. Is there a provision of financial security for one’s old age from the government? Does one get the medical help in old age from the government? Does government provides a roof on one’s head? Even the basic services and amenities which every State must provide for to all citizens like Roads, Electricity & water, educational institutions, hospital etc are not to the satisfaction of any person. The worst sufferers are senior citizens –all their medical needs must be free of cost to the best treatment, after all they have contributed towards nation building to their best of efforts and abilities. They are assets to the nation and not a liability for any one.

(Mahesh Kapasi)

Chartered Accountant

M. Com., LL.B., FCA, FCMA, FCS                                                                    

B-49, Gulmohar Park,                                       

Ex- Member-AMIMA, AMIBM, ACEA (London), MIIA (USA).                          

New Delhi-110 049

E-Mail: maheshkapasi49@gmail.com


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