Monday, 23 January 2017
Amended I-T law harsh, prone to misuse by taxmen: Experts
As the dust begins to settle on demonetization and the taxman hunts for unexplained money, there is a lurking concern among practitioners and senior levels of the tax office as to how harshly the new law would be used.
Money borrowed from a friend, jewellery inherited from great grandmother, gifts, capital received by a small businessman, amount spent in daughter's wedding or in regular household expenditure can be questioned and taxed at a far higher rate if someone fails to offer a "satisfactory explanation" to the tax officer.
Indeed, a person may have to cough up as high as 83% -- as against 35% in the past -- if the I-T department doubts such 'income' or 'expenses'.
"We have discussed the matter among ourselves. It's a strong provision in the (Income Tax) Act and the department would find it handy in mobilising tax from black money. But there are chances that it may be misused," said a senior tax official in Mumbai which accounts for the highest direct tax collection. According to senior chartered accountant Dilip Lakhani, in a loan received the assessing officer can always question the credit worthiness of the lender or describe family jewellery (beyond 500 gms) as unexplained investment.
This year, the government decided to advance the Union Budget presentation to February 1, doing away with a decades-old practice of presenting it on the last working day of February. Prime Minister Narendra Modi had said that this would allow for the Finance Bill to be passed early and make funds available on time.
The Opposition parties had sought postponement of the Budget on the grounds that the ruling government could announce sops for the states in line for elections and sway the votes.
While dismissing the petition, filed by Manohar Lal Sharma, the Supreme Court said, "There is no illustration to support that the presentation of the Union Budget would influence voters' mind in state elections."
Sunday, 22 January 2017
PNB to provide technology platform for pilot launch of IPPB
State-owned Punjab National Bank (PNB) today said it will provide technology platform for pilot launch of India Post Payments Bank (IPPB).
PNB & IPPB
The memorandum of understanding (MoU) in this regard was signed between PNB and IPPB yesterday.
As per the agreement, PNB shall provide technology platform for pilot launch of IPPB on receipt of regulatory approval from Reserve Bank of India, the bank said in a regulatory filing to stock exchanges.
IPPB last year received certificate of incorporation from the Registrar of Companies, setting the stage for the new bank to begin operations during 2017.
The bank will be headquartered in New Delhi and plans to launch 650 branches across the country during the year. The first PSU under the Department of Posts, IPPB expects to complete the rollout of its branches all over the country by September 2017.
IPPB aims to become the most accessible bank in the world, riding on advanced banking and payments technology. Coupled with physical presence across 1.55 lakh post offices and the reach of the postman, it plans to become a powerful and effective vehicle of real financial inclusion in the country.
Source:- Business Slandered
Thursday, 19 January 2017
7th Pay Commission: Centre Directs States to Imply Recommendations Coming March
The centre today urged various States to implement the recommendations made by the 7th Pay commission for pay hikes in salaries and pensions coming this March. Although, the Union Cabinet did not much give a merry news earlier at the star of the new year as the revised salaries got delayed. But in a recent notification provided by the Centre, it has been stated that the Finance Ministry wants all the pledged States may imply the recommendation in every plausible way henceforth not affecting any of the autonomous body.
We earlier reported that the autonomous bodies are most likely not to get affected thus urging the organisations to work out with their affairs in such a way that it may not hamper functions and put an extra burden on the central chequer. Also, the administrative ministries concerns will be taken into consideration thus keeping such cases under recommended pay scale as well as being justified on the basis of functional procedures and recruitment qualification.
Till date, most of the States have nodded in favour of implementing 7th pay commission recommendation, but the date has not been finalised yet. So, the urge to close the date in an official manner by the end of March may help lakhs of Central Government employees and pensioners a breath of relief. Jammu & Kashmir being the first in the .list to agree with Honourable PMs effort was followed by Uttarakhand, Haryana, Uttar Pradesh and Goa.
Seeking proper salary for almost 58 lakhs employees, excluding pensioners, the respective recommendation suggests minimal hike of 14.27% in basic salary, however, the lowest in the past 70 years. As the previous government recommended a minimum of 20% hike in basic salary under the 6th pay commission which was favourably doubled up when the present government came to power in 2008.
The central government employees, on the other hand, have announced a day strike on February 15, 2017, with all force to enable the previously promised pay hikes in the basic pay. Though, with demonetisation probe going on across the nation, the Centre may face a good amount of economic cost which ought to be given to each State before implying the recommendations by 7th pay commission.
Meanwhile, States who have not yet agreed on implying recommendations, but still moving ahead with the new norms set by 7th pay panel tend to face strict offences as Punjab University, which going through a financial crisis hiked its fees of few courses by 12% to 13% whereas rest of traditional courses by 5% to 6%. The government issued a notice of bearing at least 30% of the fiscal liability aroused due to pay hike as per the recommendations.
Source : http://fabnewz.com/
Government may lower limit for quoting PAN number for cash transactions
Unwilling to lose the momentum it gained for a less-cash economy after demonetisation and restrictions on cash withdrawals, the government may announce big disincentives in the upcoming Budget for usage of cash.
Sources revealed to ET Now that the upcoming budget could come up with a series of such big disincentives.
The government may reduce threshold for quoting PAN card for cash transactions, say sources.
The threshold, which is Rs 50,000 now, may be brought down to Rs 30,000 to bring more transactions within formal economy. Sources say the threshold for quoting PAN Card details for merchant transactions can also be reduced.
In addition to these steps, the government may also announce cash-handling charges for cash payments above a certain limit.
The move is part of the government's efforts to tighten the noose around people who deal in large cash transactions.
In fact, the threshold for quoting PAN Card details for merchant transactions could also be brought down from current Rs 2 lakh. With Aadhaar now having the government's legal backing, the usage for Aadhar card may also be made mandatory as an alternative for people not having PAN card.
In addition to these steps, the government may also announce cash-handling charges for cash payments above a certain limit.
Sources have told ET Now that a levy could be in the works for cash transactions over Rs 1 lakh.
"The scale of the implicit cost of transacting in cash is not fully understood. We are of the opinion that licencing authorities including government agencies should levy a cash handling charge for payments in cash above a certain threshold. The cash handling charge so collected should be exclusively used to fund new infrastructure for accpeting digital payments (like POS devices)," a source said.
The move is aimed at moving from a less-cash to a cashless society post the demonetisation drive that was brought into effect by PM Modi on November 8.
These measures will help the government stay on track towards a less-cash economy as there are concerns that easing of cash-withdrawal limits at banks and ATMs might take the economy back to pre-demonetisation prevalence of cash.
Also, these steps may seem necessary to promote a less-cash economy as digital payments cannot be encouraged through apps and PoS alone due to the poor state of infrastructure and lack of digital literacy in the country.
Sources revealed to ET Now that the upcoming budget could come up with a series of such big disincentives.
The government may reduce threshold for quoting PAN card for cash transactions, say sources.
The threshold, which is Rs 50,000 now, may be brought down to Rs 30,000 to bring more transactions within formal economy. Sources say the threshold for quoting PAN Card details for merchant transactions can also be reduced.
In addition to these steps, the government may also announce cash-handling charges for cash payments above a certain limit.
The move is part of the government's efforts to tighten the noose around people who deal in large cash transactions.
In fact, the threshold for quoting PAN Card details for merchant transactions could also be brought down from current Rs 2 lakh. With Aadhaar now having the government's legal backing, the usage for Aadhar card may also be made mandatory as an alternative for people not having PAN card.
In addition to these steps, the government may also announce cash-handling charges for cash payments above a certain limit.
Sources have told ET Now that a levy could be in the works for cash transactions over Rs 1 lakh.
"The scale of the implicit cost of transacting in cash is not fully understood. We are of the opinion that licencing authorities including government agencies should levy a cash handling charge for payments in cash above a certain threshold. The cash handling charge so collected should be exclusively used to fund new infrastructure for accpeting digital payments (like POS devices)," a source said.
The move is aimed at moving from a less-cash to a cashless society post the demonetisation drive that was brought into effect by PM Modi on November 8.
These measures will help the government stay on track towards a less-cash economy as there are concerns that easing of cash-withdrawal limits at banks and ATMs might take the economy back to pre-demonetisation prevalence of cash.
Also, these steps may seem necessary to promote a less-cash economy as digital payments cannot be encouraged through apps and PoS alone due to the poor state of infrastructure and lack of digital literacy in the country.
Source : The Economic Times
Grant of Transport Allowance at double the normal to deaf and dumb employees of Central Government – Finmin Orders
“Transport Allowance at double normal rates would be admissible to the ‘Hearing Impaired employees having loss of sixty decibels or more in the better ear in the conversation range of frequencies’ as per Persons With Disabilities (Equal Opportunities, Protection of Rights and Fun Participation) Act, 1995”
No.20/2/2016-E-II(B)
Governmént of India
Ministry of Finance
Department of Expenditure
North Block, New Delhi
Dated: 17.01.2017
OFFICE MEMORANDUM
Subject: Grant of Transport Allowance at double the normal to deaf and dumb employees of Central Government
In supersession of this Department O.M.No.21(2)/2011-E-II(B) dated 19.02.2014 regarding admissibility of Transport Allowance at double the normal rates to employees who are deaf and dumb. the undersigned is directed to say that the matter has been re-examined and it has been decided with the approval of Competent Authority that Transport Allowance at double the normal rates is admissible to Hearing Impaired employees also in addition to employees who are both deaf and dumb.
2. Transport Allowance at double normal rates would be admissible to the ‘Hearing Impaired employees having loss of sixty decibels or more in the better ear in the conversation range of frequencies’ as per Persons With Disabilities (Equal Opportunities, Protection of Rights and Fun Participation) Act, 1995.
3. The admissibility of Transport Allowance at double the normal rates to above categories of employees is subject to recommendation of the Head of ENT Department of a Government Civil Hospital and fulfilment of other conditions applicable in respect of other disabilities mentioned in D/o Expenditure’s O.M. No. 19029/1/78-E-lV (B) dated 31st August, 1978 read with dated 29.08.2008.
4. In so far as the persons serving in the Indian Audit and Accounts Departrnent are concerned, this order issues in consultation with the Comptroller And Auditor General of India.
5. These orders would be effective from 19.02.2014.
6. Hindi version is attached.
(Nirmala Dev)
Deputy Secretary (EG)
Authority: www.finmin.nic.in
Cabinet approves the repealing of the obsolete and redundant laws
Press Information Bureau
Government of India
Cabinet
18-January-2017 15:23 IST
Cabinet approves the repealing of the obsolete and redundant laws
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for introduction of the Repealing and Amending Bill, 2017 to repeal 105 Acts.
Background:
The two Member Committee constituted by the PMO, the Law Commission of India and the Legislative Department identified 1824 redundant and obsolete Central Acts for repeal. After careful examination and consultation with various Ministries/Departments in the Government of India, four Acts have been enacted to repeal 1175 Central Acts (during the period May, 2014 to August, 2016) by Parliament which are –
i) The Repealing and Amending Act, 2015 (17 of 2015) repealing 35 Acts; The Repealing and Amending (Second) Act, 2015 (19 of 2015) repealing 90 Acts;
ii) The Appropriation Acts (Repeal) Act, 2016 (22 of 2016) repealing 756;
iii) Appropriation Acts including Appropriation (Railways) Acts;
iv) The Repealing and Amending Act, 2016 (23 of 2016) repealing 294 Acts.
Out of the aforesaid 1824 Acts, 227 Acts (including Appropriation Acts enacted by Parliament for the States under President's Rule) are identified to be repealed by State Governments have been requested to take necessary action to repeal them.
A list of remaining 422 Central Acts was circulated among all the Ministries/ Departments for their comments on repeal of Acts pertaining to their respective Ministries/Departments. Till date, 73 Ministries/Departments including Legislative Department have given their comments whereby they have agreed to repeal 105 Acts and disagreed to repeal about 139 Acts. On the basis of the comments/concurrence received from the Ministries/Departments, 105 Acts have been identified for repeal by this Department.
Looking to save tax on House Rent Allowance? Here's all you need to know
For most employees, House Rent Allowance (HRA) is a common component of their salary structure. Although it is a part of the salary, HRA, unlike basic salary, is not entirely taxable. Subject to certain conditions, a part of HRA gets exempted under Section 10 (13A) of the Income-tax Act.
The amount of HRA exemption is deductible from the total income before arriving at a taxable income. This helps the employee in saving tax. Remember, the HRA received is fully taxable if an employee is living in his own house or if he does not pay any rent.
Who can avail HRA?
The tax benefit on HRA is available only to a salaried individual who has the HRA component as part of his salary structure and is staying in a rented accommodation.Self-employed professionals cannot avail the deduction.
How much is exempted?
The exemption for HRA benefit is the minimum of:
i) Actual HRA received
ii) 50% of salary if living in metro cities, or 40% for non-metro cities; and
iii) Excess of rent paid annually over 10% of annual salary
For calculation purpose, the salary considered is 'basic salary'. In case 'Dearness Allowance (DA)' (if it forms a part of retirement benefits) and 'commission received on the basis of sales turnover' is applicable, they too are added to compute the minimum HRA exemption available.
The tax benefit is available to the person only for the period in which the rented house is occupied.
Example of HRA calculation
Let's say an individual, with a monthly basic salary of Rs 15,000, receives HRA of Rs 7,000 and pays Rs 8,400 rent for an accommodation in a metro city. The tax rate applicable to the individual is 20 percent of his income.
To avail HRA benefit, the least of the following amount (yearly) is exempted, rest is taxable:
i) Actual HRA received = Rs 84,000
ii) 50% of salary (metro city) = Rs 90,000 (50% of Rs 1,80,000)
iii) Excess of rent paid annually over 10% of annual salary = Rs 82,800 (Rs 1,00,800 - (10% of Rs 1,80,000))
It shows that of Rs 84,000 actually received as HRA, Rs 82,800 gets tax exemption and only the balance of Rs 1,200 gets added to the employee's income, on which a tax of Rs 240 ( 20 per cent slab ) gets payable.
Documents
HRA exemptions can be availed only on submission of rent receipts or the rent agreement with the house owner.
It is mandatory for the employee to report the Pan Card of the 'landlord' to the employer if the rent paid is more than Rs 1,00,000 annually, or if it exceeds Rs 15,000 per month.
Special cases
There could be special scenarios in claiming HRA tax benefit, such as:
1. Paying rent to family members
The rented premises must not be owned by the person claiming the tax exemption. So if you stay with your parents and pay rent to them then you can claim that for tax deductions as HRA. However, you cannot pay rent to your spouse. As, in the view of the relationship, you are supposed to take the accommodation together. Thus, these transactions can invite the scrutiny from the Income -tax Department.
2. Own a house, but staying in a different city
One can avail the simultaneous benefit of deduction available for the home loan against 'interest paid' and 'principal repayment' and HRA in case your own home is rented out or you work in another city.
Individuals who don't get HRA but pay rent
There may be some employees who might not have HRA component in their salary structure. Also, a non-salaried individual might be paying rent. For them, Section 80 (GG) of the Income-tax Act offers help.
An individual paying rent for a furnished/unfurnished accommodation can claim the deduction for the rent paid under Section 80 (GG) of the I-T Act, provided he is not paid HRA as a part of his salary by furnishing Form 10B.
How much
The least of the following is available for exemption from tax under Section 80GG:
(i) Rent paid in excess of 10% of total income
(ii) 25% of the total of the total income*
(iii) Rs 5,000 per month
*Under this section, the total income is calculated as gross total income minus long-term capital gains, the short-term capital where Securities Transaction Tax (STT) has been paid and deductions under Sections 80C to 80U, except Section 80GG.
Conditions
While claiming a tax deduction, one must remember that the individual himself or his/her spouse, or minor child, or as a member of the Hindu Undivided Family (HUF) must not own any accommodation. Also, if the individual owns any residential property at any place and earns rent from it then no deduction is allowed.
One can avail the simultaneous benefit of deduction available for the home loan against 'interest paid' and 'principal repayment' and HRA in case your own home is rented out or you work in another city. However, the same is not available in case of Section 80GG.
Source:-The Economic Times (With inputs from Sunil Dhawan)
31st All India Postal Volleyball Tournament at Visakhapatnam from 18 to 21-1-2017
Seventh Central Pay Commission’s recommendations -amendment of Service Rules/Recruitment Rules-Dopt
No .AB-14017/13//2016-Estt(RR)-Pt
Government of India
Ministry of Personnel P.G & pensions
***
North Block, New Delhi
Dated:18.01.2017
OFFICE MEMORANDUM
Subject : Seventh Central Pay Commission’s recommendations -amendment of Service Rules/Recruitment Rules
The undersigned is directed to refer to this Departments OM No AB.14017/61/2008-Estt. (RR) dated 24/03/2009 regarding amendment of Service Rules/ Recruitment Rules in pursuance of Sixth Pay Commission’s recommendations. The revised pay structure recommended by 6 thCPC and approved by the Government included a number of ‘merged grades’ with a common Pay Band and Grade Pay.
2. In order to regulate the service rendered in the pre-revised scale where there have been merger of more than one grade into one with a single grade pay, it was advised that a Note to the following effect may be inserted under relevant columns in the Schedule of RRs and under relevant provisions in Service Rules.
“Note: For the purpose of computing minimum qualifying service for promotion, the service rendered on a regular basis by an officer prior to 1.1.2006/the date from which the revised pay structure based on the 6th CPC recommendations has been extended, shall be deemed to be service rendered in the corresponding grade pay/pay scale extended based on the recommendations of the Commission. For purposes of appointment on deputation/ absorption basis, the service rendered on a regular basis by an officer prior to 1.1.2006/the date from which the revised pay structure based on the 6th CPC recommendations has been extended, shall be deemed to be service rendered in the corresponding grade pay/pay scale extended based on the recommendations of the Commission except where there has been merger of more than one pre-revised scale of pay into one grade with a common grade pay/pay scale, and where this benefit will extend only for the post(s) for which that grade pay/pay scale is the normal replacement grade without any upgradation.”
3. It has been observed that after implementation of 7th CPC there are only a few cases of merger/upgradation of pay scale. However in cases where merger/ upgradation of pay is recommended in the 7th CPC and the same has been accepted, there is a need to provide a Note on similar lines as above with relevant changes i.e. the date 1.1.2006 needs to be replaced with 1.1.2016 and “6th CPC” is to be replaced with “7th CPC”. In other cases the Note as referred
above need not to be prescribed in the RRs/SRs where no merger/ upgradation are
involved as per 7th CPC recommendations.
(G. Jayanthi)
Director(E-I)
Source : http://document.ccis.nic.in/WriteReadData/CircularPortal/D2/D02est/7CPC-Amendment-18012017.pdf
Wednesday, 18 January 2017
AIAPC Punjab wrote letter to APMG (S) Punjab Circle for approval of "Adhoc Committee"
आल इंडिया एसोसिएशन ऑफ़ पोस्
All India
Association of Postmaster Cadre, Punjab Circle
कैंप: शाहपुर कान्दि टाउनशिप, Camp at: Shahpur Kandi Township
गुरदासपुर, पंजाब- १४५०२९, Gurdaspur, Punjab-145029
------------------------------
Mob: +91 9463453176, Ph:
01870263270, Website: aiapcpunjab.blogspot.in,
email: aiapcpunjab@gmail.com.
------------------------------
To
The
Assistant Postmaster General (Staff),
By Regd
Chandigarh-160017.
No. AIAPC/Punjab/Corr/09/2017-
Sub: - Formation of Adhoc Committee in respect of All India Association of
Postmaster Cadre, Punjab
Circle.
Ref: - Your office letter No. Union/9-22/2016 dated 13.10.2016 &
29.11.2016
Ref: - AIAPC CHQ letter No. AIAPC-40/Corr/2016-2017 dated 31.12.2016
Respected Sir,
Kindly refer above quoted letters on the subject cited above, in this
connection; this association invites your kind attention to approve “Adhoc
Committee” in respect of All India Association of Postmaster Cadre, Punjab
Circle
Waiting for positive response!
Thanking you sir,
Yours
faithfully,
Sd/-
(NARINDER PAL)
CONVENOR AIAPC
PUNJAB CIRCLE
Copy to: - Shri Balveer Singh GS AIAPC Camp at
Postmaster Grade-II, Jaipur City (Raj)-302003 w.r.t. his letter No. AIAPC-40/Corr/2016-2017
dated 31.12.2016 for information please.
Revision of Provisional pension sanctioned under Rule 69 of the CCS (Pension) Rules, 1972
o.25014/05/2016.AIS-II
Government of India
Ministry of Personnel, Public Grievances and Pensions
Department of Personnel & Training
North Block, New Delhi - 110001
Dated the 17 January, 2017
To
The Chief Secretaries of all the
State Governments and UTs.
Subject: Revision of Provisional pension sanctioned under Rule 69 of the CCS (Pension) Rules, 1972.
Sir,
I am directed to refer to the Department of Pension and Pensioner Welfare's OM No.38/6/2010-P&PW(A)(Pt.) dated 18th March, 2013 (copy enclosed) regarding "Revision of Provisional pension.".
2. The applicability of the provisions of the aforesaid OM regarding grant of Provisional Pension sanctioned under Rule 69 of the CCS (Pension) Rules, 1972 has been considered by this Department and it has been decided to make the provisions of the aforesaid Office Memorandum of Department of Pension and Pensioner Welfare regarding "Revision of Provisional Pension" applicable, mutatis-mutandis, to the All India Service Pensioners to whom provisional pension was sanctioned under Rule 6 of All India Service (Death-Cum-Retirement-Benefits) Rules, 1958.
Yours faithfully,
(Rajesh Kumar Yadav)
Under Secretary of Government of India
Authority: http://dopt.gov.in/
Single Sign On-CSI-FSI Integration Process
From: DDG (Technology)
Sent: Thursday, November 17, 2016 5:24 PM
To: All CPMG
Cc: ADG (CSI); Director (Technology)
Subject: Single Sign On-CSI-FSI Integration Process
Respected Madam/ Sir,
As you are aware the pilot (I) rollout of CSI has been successfully completed in Mysuru Division, Karnataka. As part of the CSI project,each employee has been provided with an employee code which will be used as a login ID.
The counter-staff now has multiple log-in credentials viz; CSI log-in, Finacle log-in and McCamish log-in. This system is not only cumbersome, time taking but also not very secure from the point of view of authentication of financial transactions.
In view of the above points it has been decided that there shall be only one log-in credentials per user for all applications. The CSI shall provide the Single Sign On (SSO) solution for this functionality. . The SSO solution shall ensure that each employee having the CSI log-in credentials should be able to access Finacle and McCamish. The SSO shall have verification and authentication system to make it a secure system. This would help the Employees as they will not have to handle multiple log-in credentials. It will be beneficial for the Department and the public as every financial transaction shall be authenticated. The chances of frauds and embezzlements using others’ log-in credentials will reduce drastically thus making the system more reliable and secure.
It is required that each employee’s ID provided by CBS and PLI is mapped with the one provided by the CSI. This activity is essential to avoid any operational difficulties once the SSO is rolled out. In order to do this mapping the M/s TCS has provided a portal along with the log-in credentials for each division. The CBS User-id and PLI user-id along with the mobile number and Aadhar number are to be filled in for all employees on this portal. Some data is pre-populated including mobile number and adhaar number for officials who have already shared these details.
In case of addition of new employees whose names might not be reflecting on the portal, it is requested to follow the procedure of getting their AD user created for them. Once their AD users are created the portal shall automatically be updated and their names shall reflect on it.
It is requested that due-diligence may be followed in this activity as SSO shall become extremely important for smooth functioning of the Post Offices. The link of the portal is given below:
The log-in credentials is attached to this mail. It is requested to complete this activity by 1st December, 2016.
Yours Sincerely,
Ashish Kumar
Deputy Director General (Technology)
Ph:9650660777
Dak Bhawan,Sansad Marg, New Delhi-110001
Budget 2017 - Expectations of the Salaried Class
With the Union Budget 2017 just a couple of weeks away, there are expectations that the government will take some measures to help the common man, especially the salaried class, who has rallied behind the government's decision on demonetization despite suffering a lot post the note ban.
Experts are also of the view that the upcoming Budget 2017 should provide some tax gain for the common people to soothe at least the cash ban pain.
Otherwise also, "there are only a few tax concessions available to individual tax payers. Most of the current set of tax benefits like medical reimbursement, conveyance allowance etc., at the present level, do not offer any real economic benefit to the individual tax payers.
Instead they only add to the administrative burden for the employers as claims made by the employees have to be reviewed and processed by them," says Vikas Vasal, National Leader-Tax, Grant Thornton India LLP.
Thus, either these tax benefits should be substantially increased or they should be done away with and instead a special tax benefit like the erstwhile standard deduction be introduced. "This would simplify the tax law, reduce administrative burden and curtail unnecessary litigation associated with these tax concessions," suggests Vasal.
In view of the above, here's what to expect from the Budget 2017 for the salaried class:
1. TAX SLAB RATES SHOULD BE REVISED UPWARDS
It is widely expected that there may be some upward revision in the income tax slabs to provide some relief to the common tax payers. What is making people more optimistic is the recent hint from Finance Minister Arun Jaitley himself that income tax slabs could further be increased, lowering the tax burden on taxpayers due to higher revenue being collected on account of cashless systems.
Some people are even expecting that the government should increase the current income tax exemption limit from Rs 2.5 lakh to Rs 4 lakh. However, the common expectation is that the exemption limit be raised from the current Rs 2.50 lakh per annum to Rs 3 lakh, while the subsequent slabs of 10 per cent, 20 per cent and 30 per cent should be applicable to annual income range of above Rs 3 lakh and up to Rs 10 lakh, above Rs 10 lakh and up to Rs 20 lakh and above Rs 20 lakh, respectively. If implemented, this will help alleviate the common man’s sufferings to some extent.
2. REDUCTION IN TAX RATES
Salaried individuals are always at a loss when it comes to tax rates since they end up paying high amount of taxes when they fall into high salary brackets. Currently anyone who earns more than Rs. 10 lakh per annum pays 30% tax on the amount exceeding Rs. 10 lakh. Thus, he has to forgo a large portion of his income in taxes. Hence, apart from revision in tax slabs, change in tax rates would always be a welcome move.
"The IDS scheme of the government launched last year is expected to add a lot of tax revenues to the government coffers with almost Rs. 75,000 crore declared as black money. Considering a tax rate of 45%, almost Rs. 35,000 will be collected as taxes. These revenues are expected to help the government reduce the tax rates in the coming FY," informs Vaibhav Sankla, Director, H&R Block India.
3. HIGHER DEDUCTION FOR INTEREST PAID ON HOUSING LOAN
Housing and the real estate sector are facing a lot of hardship. The recent media reports indicate that sales have declined substantially and the sentiment is quite low. It is a fact that the real estate sector is one of the key growth engines for a developing economy like India.
It provides large-scale employment to unskilled and semi-skilled workers in the country, which is a need of the hour, to boost employment opportunities for a large scale population. This sector also impacts a few of the critical sectors like cement, steel, logistics etc., which in turn are important for the overall growth of the GDP.
Also, "keeping in view the government's agenda of providing housing for all, it is imperative that some tax concessions are provided in the Budget. One such option could be to increase the tax deduction for interest paid on housing loan from Rs 2 lakh to Rs 3 lakh. This will also provide an immediate boost to the banking services sector, which is flush with funds post demonetization and looking at avenues to lend money to the masses," says Vasal.
Some tax experts also believe that people having a single home need to be allowed to deduct the entire amount paid as interest on home loan. Vaibhav Sankla, for instance, says that currently the home loan interest deduction is capped at Rs. 2 lakh per annum for self-occupied house property and deduction of actual interest paid is allowed for a second home that is given on rent or is deemed rented.
However, "nowadays buying a second home is not very common owing to high property prices. In such cases, home owners possessing a single home need to be allowed to deduct the entire amount paid as interest on home loan. This would be a welcome relief for salaried individuals since they do not have much scope for tax saving and moreover this is an expense-based deduction," says Sankla.
4. INCREASE IN DEDUCTION FOR INSURANCE PREMIUM
The deduction under 80D is currently capped at Rs. 25,000 for self, spouse and dependent children. An additional deduction of Rs. 25,000 is available for parents and Rs. 30,000 if they are senior citizen parents. Hence the total deduction available under this section can go up to Rs. 55,000. A deduction for preventive medical expenses is also available up to Rs. 5,000 spent as a part of the overall deduction.
A deduction for the actual expenses made in this regard on medical insurance premiums will be a welcome move since insurance premiums are very high, especially when it comes to parents. The cap of Rs. 5,000 on preventive health check-up expenses should also be removed in budget 2017. It will help salaried individuals to save huge amounts in taxes.
5. INCREASE IN DEDUCTION FOR EDUCATION AND CHILDCARE EXPENSES
Childcare nowadays has become very expensive for parents, especially for those staying in metro cities. The maximum deduction for tuition fees permitted under Section 80C is Rs 1.5 lakh per financial year, with deductions eligible only for two children per assessee. Tuition fees generally constitute a very small portion of the entire education fees for the year. This deduction should be extended to other portions of the fees as well.
"Childcare in big cities also calls for daycare expenses, especially for working parents. The expenses many a time run into more than Rs 1-2 lakh per annum. These expenses should also form a part of deductions under Section 80C. This will provide another expense-based deduction to individuals and be a great move towards providing a deduction aimed at working parents," says Sankla.
6. DEDUCTION FOR RENT PAID WHERE NO HRA IS PAID BY THE ORGANIZATION
Generally, organisations pay HRA to employees in order to ease the burden of rent and there is an exemption available under the tax laws on HRA. However, there are instances when organisations do not include HRA in the salary components.
When HRA is not paid by the organization, salaried individuals are being allowed a deduction of Rs. 5,000 per month under Section 80GG from FY2016-17. This deduction should be increased to at least Rs. 10,000 for metro cities. This is because rent for a decent accommodation in metro cities has risen to this level and there is a need to increase the deduction so that salaried individuals get the benefit of this deduction.
7. STANDARD DEDUCTION
There are many deductions/ exemptions like medical reimbursement, conveyable allowance, meal allowances etc. Employees actually incur much more cost and obtain very little tax benefit. To highlight, a family of four members will incur on an average, say, Rs 50,000 plus on general medical ailments. And if the family has senior/ailing households, then this expenditure for general hospital/doctor visits and medicines may be much higher.
Therefore, there is need to take a re-look at all such benefits and increase them substantially in line with the current economic reality. Same is the case with other tax benefits like travel allowance etc. Keeping this in view, there is need for a special tax benefit like the erstwhile standard deduction to be introduced the budget 2017.
Source: http://www.financialexpress.com/
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