NAGPUR: The finance minister faces a tightrope walk if he is to satisfy demands from trade associations and tax payers regarding tax reduction, while implementing the government's agenda of reigning in fiscal deficit. Tax professionals believe fixing the deficit should be through cuts in subsidy and other expenditure rather than hiking taxes, while the salaried class as usual wants a hike in threshold of taxation limit. Another common demand from experts was introduction of the long pending direct tax code (DTC) and goods and services tax (GST).
The Institute of Chartered Accountants of India (ICAI) has taken up issues aimed to reducing tax burden. It wants the deductible limit on housing loan interest to be doubled to Rs 3 lakh. ICAI also wants provisions easing capital gains tax liability in deals where property changes hand at a rate lower than the government valuation of market price. This includes a suggestion to charge tax at source on such transactions, said chairman of ICAI's western regional council Julfesh Shah.
However, Shah personally believes government should focus on controlling the fiscal deficit, which is expected to come to 5.7 to 6%. "This is mainly due to high subsidy bills. However, government should ensure the tax sops are not too taxing for itself," he said.
Vidarbha Taxpayers Association (VTA), a new body taking up taxpayers' issues, says the government must come up with a scheme to give social security benefits in direct proportion to taxes paid by an individual. VTA says that in this way the government can give back to individual payers what he has paid as tax.
VTA has also suggested increasing the threshold of personal taxation for very senior citizens to Rs 6 lakh from Rs 5 lakh at present, while enhancing the limit for senior citizens by Rs 50,000 to Rs 3 lakh. The limit for women below 65 years should be Rs 2.5 lakh and for other individuals and HUFs at Rs 2.25 lakh from Rs 1.90 lakh at present, it suggested.
Former secretary of Nagpur Chamber of Commerce Limited (NCCL) Kailash Jogani says the chamber has been batting to include agricultural income in the tax net. "Although small and marginal farmers can be spared, big players, especially those with other income, should be taxed on farm income. Agriculture income shown in the tax returns is often used to dodge tax liability. A chunk of income earned from other sources is shown as that from agriculture to save taxes," said Jogani.
Jogani wants the government to control fiscal deficit, but also withdraw service tax on some services and increase the threshold of taxable salary income. He stressed that the deficit is not due to low revenue collections but high government expenditure, which can be brought down by reducing slippage.
Chairman of ICAI's Nagpur branch Abhijeet Kelkar says a standard deduction of 33% of taxable income should be brought back. This will reduce the tax liability of the salaried class to a great extent.
Central government employee CV Raghupati Rao says the salaried class need relief from taxation, which can come by increasing threshold of taxable income to Rs 3 lakh. This may leave some disposable income in the hands of the middle class, which is already reeling under the burden of high EMIs on account of home loans due the rate hikes by RBI.
Ashutosh Wakhre, a financial trainer, expressed concern over rising fiscal deficit and added that the limit for investments eligible for tax exemption under section 80C should be increased to Rs 2 lakh at least from Rs 1 lakh at present.
Shahid Sharif, a consumer activist, wants the finance minister to provide for the food security bill.
Source : The Times of India, March 15, 2012
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