TNN| Feb
18, 2016, 01.27 PM IST
Salaried employees often
justifiably claim to be the taxman's milch cow. Unlike businessmen and
professionals who are able to claim tax exemption on several expenses, salaried
employees have to pay a huge sum as taxes that are deducted at source by the employer.
An employee can only get the
benefits of some tax exempt allowances. However, most of the exemption limits
have not been revised for years, eroding the real tax benefit.
For a few allowances exemption
limit has been revised upwards recently, but even that did not fully take into
account the rate of inflation. For example, an exemption of transport allowance
of Rs 800 per month existed from the financial year 1997-98. The last budget
doubled it to Rs 1,600 per month. Given the change in the inflation index, this
figure ought to have been revised to at least Rs 2,600.
Every year, Rs 1.5 lakh is
allowed for deduction under section 80C (available for a wide range of
investments such as PPF, NSC or repayment of housing loan). It was last revised
for FY 2014-15 from Rs 1 lakh that existed since 2005-06. If inflation was
taken into account, the revised cap should have been Rs 2.17 lakh. Many other
tax exemption limits haven't seen any revisions for years (see chart).
The Standing Committee, which had
examined the now defunct direct tax code (DTC), had recommended revisions in
some cases, such as a hike in exemption limit for medical reimbursement from
the current Rs 15,000 to Rs 50,000. However, it had also suggested abolishing
of Leave Travel Allowance (LTA).
There are other conditions in our
tax laws that also aren't fair to the taxpayer. For instance, LTA for you and
your family is tax exempt (limited to the economy class airfare for the
shortest route available to your destination). However, you can avail of LTA
benefit only twice in a block of four calendar years, for travel within India.
The exemption should be available for annual travel.
Interest of up to Rs 2 lakh per
year on housing loans is allowed as a deduction from 'income from house
property' - but with a catch. Construction must be completed in three years,
else the interest deduction is limited to Rs 30,000 only. As this newspaper has
written in the past, most housing projects are getting delayed beyond three
years and for no fault of taxpayers, their tax benefits are getting reduced
drastically.
Source : http://economictimes.indiatimes.com/
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