Raise Personal Income Tax Exemption Limit to Rs 4 lakh – Assocham

Raise Personal Income Tax Exemption Limit to Rs 4 lakh – Assocham

Budget-2016-17: Revision in IT exemption to at least Rs 4 lakh minimum expectation of common-man

Monday, February 15, 2016

Revision in the income tax exemption limit to at least Rs four lakh is the most important and pressing expectation of a common-man who also seeks from the Finance Minister Mr Arun Jaitley extra incentives for savings and more tax allowance for expenditure on education and health, an ASSOCHAM Aam Aadmi survey for the ensuing budget, has noted.

Over 87% of respondents in the survey said, increasing the basic tax exemption limit from the present Rs. 2.5 Lakh to Rs. 4 Lakh should be the minimum that the Finance Minister should announce in the 2016-17 budget. The higher exemption limit was necessitated by increasing cost of living, particularly with regard to health, education and transport.

The amount of medical expenses reimbursed by the employer on treatment of employees or family members is exempt from tax to the extent of Rs. 15, 000 per annum. This limit was set in 1998 and it will be a welcome step for the government to consider increasing the exemption limit to a more realistic Rs. 50,000 per annum, said nearly 88% of the respondent.

Similarly, deduction of Rs. 15,000 under section 80D for payment of medical insurance premium was set in the year 2008. In order to encourage and bring more people under the health insurance umbrella, the deduction could be increased to Rs. Rs. 50,000, add majority of respondents.

The survey was conducted in major places like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabad, Pune, Chandigarh, Dehradun etc. About 500 employees from the different sectors were covered by the survey from each city on an average.

Majority of respondents said leave encashment exemption limit for tax calculation should be raised to Rs 10 lakhs. The current limit of Rs three lakh was notified by the CBDT way back in 1998 and needs to be raised substantially.

Also the children education allowance exemption limit should go from the present Rs 100 to Rs 1,000 per month. Likewise, the hostel expenditure allowance which is presently exempt up to Rs 300 pm per child for maximum of two children be increased to Rs 3,000 pm.

The limit for children education allowance is too low as compared to the prevailing school fee and was fixed in FY 1988-99. Also, the limit hostel expenditure allowance as also fixed in 1988-89,” it said.

A similar situation exists with regard to medical expenses reimbursed by the employer. It is exempted to the extent of Rs 15,000 per annum. This limit was fixed 17 years ago and needs to be revised significantly, at least to Rs 50,000 per annum.

About 76% of the respondents said that the standard deduction for salaries employees should be revived. Standard deduction is not a personal allowance but was earlier given as a lumpsum for meeting employment-related expenses such as on conveyance, books, and so on. Salaried employees should not be deprived of standard deduction from their salaries when professionals/businessmen are eligible for deduction of expenses incurred for earning their income.

Exemption limit of conveyance allowance which is currently Rs. 800 per month should be increased as there has been a substantial increase in petrol and diesel prices. Similarly, increased cost of education necessitates the need to revise the exemption limits for various allowances like hostel expenditure allowances and children education allowance appropriately to align them with the market rates.

Over 72% of the respondents said that rising interest rates for home loans and skyrocketing property prices strengthen public expectation for revision of the exemption limits for interest on self occupied property. Its’ time for the limit of Rs. 1.5 Lakh set in the year 2001 to be increased to Rs. 3 Lakh.

The deduction of Rs. 1.5 Lakh under section 80C is currently applicable to a wide range of specified investments/ expenses like PPF, post office deposit, repayment of housing loan, life insurance premium and children’s school expense. The government may consider increasing the exemption limit to Rs. 3 Lakh to promote investments and encourage saving among taxpayers, highlighted the respondents.

Around 55 per cent of the survey respondents fall under the age bracket of 25-29 years, followed by 30-39 years (26 per cent), 40-49 years (16 per cent), 50-59 years (2 per cent) and 60-65 years.

The survey was able to target employees from 18 broad sectors, with maximum share contributed by employees from IT/ITes sector (17 per cent). After IT/ITeS sector, contribution of the survey respondents from financial services is 11 per cent. Employees working in engineering and telecom sector contributed 9 per cent and 8 per cent respectively in the questionnaire.

Nearly 6 per cent of the employees belonged from market research/KPO and media background each. Management, FMCG and Infrastructure sector employees share is 5 per cent each, in the total survey. Respondents from power and real estate sector contributed 4 per cent each. Employees from education and food& beverages sector provided a share of 3 per cent each. Advertising, manufacturing and textiles employees offered a share of 2 per cent each in the survey results.

Source: www.assocham.org

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Raise income tax exemption limit to Rs 5 lakh: Central Trade Unions

New Delhi: Trade unions today asked the government to increase the income tax exemption limit to Rs 5 lakh and the minimum wage to Rs 18,000 besides raising the minimum monthly pension to Rs 3,000 for all.

They also sought a special package for victims of the recent Tamil Nadu floods.

These demands were raised under a 15-point charter submitted by 11 central trade unions to Finance Minister Arun Jaitley during pre-Budget consultations held here. The Union Budget for the next financial year, 2016-17, is slated to be presented in Parliament in February end. It will take effect from April 1.

“We have demanded a minimum wage of Rs 18,000 per month which is higher than our earlier demand of Rs 15,000,” Bharatiya Mazdoor Sangh Zonal Organisation Secretary Pawan Kumar said after the meeting.

The Seventh Pay Commission has recommended Rs 18,000 as minimum monthly wage for central government employees and it should be the benchmark, he said.

All Indian Trade Union Congress Secretary D L Sachdev said: “We have also demanded Rs 3,000 minimum monthly pension for all and asked for a special package for flood ravaged Tamil Nadu to provide relief to workers as well as industry in the next Budget.”

Sachdev said that in view of price rise “we have also demanded from the government to increase the income tax exemption limit to Rs 5 lakh per annum”.

The union have also asked that fringe benefits like housing, medical and educational facilities and running allowances in railways should be exempted from Income Tax.

Unions also demanded that PSUs should be strengthened and expanded and the disinvestment of government shares in profit making PSUs should be stopped.

Besides, they said that the budgetary support should be provided for revival of potentially viable sick PSUs.

On the price rise, the charter said: “Take effective measures to arrest the spiralling price rise especially of food and essential items of daily use. Ban speculative forward trading in essential commodities, check on hoarding and universalise and strengthen Public Distribution System.”

Expressing concerns over steel and aluminium sectors, the unions said: “Relentless and increasing flow of import of industrial commodities including capital goods must be contained and regulated to prevent dumping and also to protect and promote domestic industries and prevent loss of employment.”

It also said that “FDI should not be allowed in crucial sectors like defence production, Railways, financial sector, retail trade and other strategic sectors. In other areas, terms and conditions for FDI should be made public.”

PTI

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Benefit from the Income Tax sops announced by the Government..?

Benefit from the Income Tax sops announced by the Government..?

In the 2014-15 Budget that was presented recently, it was announced that the income tax exemption slab will be being raised from Rs. 2 lakhs per annum to Rs. 2.5 lakhs.

On July 10, during the parliamentary session, while presenting  the budget for the year 2014-15, Finance Minister Arun Jaitley announced that the non-taxable income slab for individual tax payers has been raised from Rs. 2 lakhs to Rs. 2.5 lakhs. Also, the maximum tax exemption of Rs. 1 lakh Under Section 80C has been raised to Rs. 1.5 lakh. Interest deductions on home loan have been increased from Rs. 1.5 lakhs to Rs. 2 lakhs.

Let us now make approximate calculations about the kinds of benefits that taxpayers stand to get from these changes:

Raising the non-taxable income limit from Rs. 2 lakhs to Rs. 2.5 lakhs gives a maximum tax savings of Rs. 5600 additionally.

Since the maximum tax exemption under Section 80C has been raised to Rs. 1.5 lakhs, the tax payer gets to save Rs. 17,000 under certain exemption categories.

Since the maximum exemption under home loan deduction has been raised from Rs. 1.5 laksh to Rs. 2 lakhs, the taxpayer saves another 17,000.

Upto Rs. 2,50,000
Rs. 2,50,001 to Rs. 5,00,000	10 per cent.
Rs. 5,00,001 to Rs. 10,00,000	20 per cent.
Above Rs. 10,00,000	30 per cent.

(ii)  For persons of Age between 60 Years to 80 Years

Upto Rs. 3,00,000
Rs. 3,00,001 to Rs. 5,00,000	10 per cent.
Rs. 5,00,001 to Rs. 10,00,000	20 per cent.
Above Rs. 10,00,000	30 per cent.

(iii)  For persons having Age of 80 Years or More

Upto Rs. 5,00,000
Rs. 5,00,001 to Rs. 10,00,000	20 per cent.
Above Rs. 10,00,000	30 per cent.

.

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General Budget 2014 -15: Personal Tax Exemption Limit Raised by Rs. 50,000/-

Press Information Bureau 

Government of India

Ministry of Finance 

Personal Tax Exemption Limit Raised by Rs. 50,000/- ; No Change in the Rate of Surcharge; 15% Investment Allowance to Manufacturing Companies, to Incentivize Small Entrepreneurs and Income from Foreign Portfolio Investors to be Treated as Capital Gains. 

The General Budget 2014-15 presented by the Union Finance Minister Shri Arun Jaitley has raised the personal income-tax exemption limit by Rs. 50,000/- that is, from Rs. 2 lakh to Rs. 2.5 lakh in the case of individual taxpayers, below the age of 60 years. Exemption limit raised from Rs. 2.5 lakh to Rs. 3 lakh in the case of senior citizens. However there is no change in the rate of surcharge either for the corporates or the individuals, HUFs, firms etc. The budget proposes to continue education cess at 3 percent. 

Investment limit under section 80C of the Income-tax Act has also been raised from Rs. 1 lakh to Rs. 1.5 lakh and Deduction limit on account of interest on loan in respect of self occupied house property raised from Rs.1.5 lakh to Rs.2 lakh. To incentivize small entrepreneurs an Investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs. 25 crore in any year in new plant and machinery. The benefit to be available for three years i.e. for investments upto31.03.2017. Investment allowance to manufacturing company investing more than Rs.100 crore announced last year to continue in parallel till 31.03.2015. 

To bring greater certainty and to encourage fund manager to shift to India, income arising to foreign portfolio investors from transaction in securities will be treated as capital gains. Concessional rate of 15 percent on foreign dividends without any sunset date will be continued. 

To augment low cost long term foreign borrowings for Indian companies, the eligible date of borrowing in foreign currency has been extended from 31.03.2015 to 31.03.2017 for a concessional tax rate of 5 percent on interest payments. Tax incentive extended to all types of bonds instead of only infrastructure bonds. 

The budget proposes introduction of a “Roll Back” provision in the Advanced Pricing Agreement (APA) scheme so that an APA entered into for future transactions is also applicable to international transactions undertaken in previous four years in specified circumstances.To remove tax arbitrage, rate of tax on long term capital gains has been increased from 10 percent to 20 percent on transfer of units of Mutual funds, other than equity oriented funds. 

60 more Ayakar Seva Kendras will be opened during the current financial year to promote excellence in service delivery. Net effect of the direct tax proposals will result in revenue loss of Rs.22,200 crore. 

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Salaried women to get higher income tax exemption in the Budget 2014

God news for salaried women! Narendra Modi Government is considering higher income tax exemption limit for women in the budget for 2014-15.

Finance minister Arun Jaitley is restructuring tax slabs and is thus set to approve a proposal to raise the tax exemption limit to  Rs 3 lakh from existing Rs 2 lakh.

The Modi government will ease the tax burden on the middle class and impose a higher tax on the super rich in its first Budget to be presented by Union finance minister Arun Jaitley next month.

According to the proposal, under consideration of the new government, there would also be a tax on the super- rich bracket, comprising those earning Rs 10 crore or more of 35 per cent. This category would be above the  Rs 1 crore, class which currently pays an effective tax of 33 per cent inclusive of a surcharge that the earlier government had introduced.

India's tax regime is being overhauled by Finance minster  

Women  will be offered a higher tax relief —the threshold income below which individuals are not liable to pay taxes—for women could be fixed at between Rs. 3,25,000 to Rs. 3,50,000.

 Rs. 1 lakh annual tax deduction allowed under Section 80C of the Income-tax Act has not kept pace with the rising inflation and needs revision.

a separate deduction of at least Rs 1 lakh per year specifically for education  is being considered

Exemption on home loans:  To reduce the burden on households for the interest paid on housing loan for a self-occupied house property a deduction of up to Rs 1.5 lakh is allowed. It can be increased to Rs 5 lakh per year.

Moreover, a proposal to reduce the age for tax exemption for senior citizens to 60 years from 65 years is also under consideration.

EXISTING TAX STRUCTURE

Income of less than Rs. 2 lakh a year are exempt from paying taxes.

Earning between Rs. 2 lakh and Rs. 5 lakh annually are taxed at 10%,

Between Rs. 5 lakh and Rs. 10 lakh at 20%

Earning more than Rs. 10 lakh pays a tax of 30%.

Source: www.saharasamay.com

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Centre may hike Income Tax exemption limit from Rs 2 lakh to Rs 5 lakh

Income Tax Expectations From Modi Government

The decisive victory of Narendra Modi and his party has raised expectations of an aam aadmi like never before. Every step the new government takes will set the course of action for the next five years.

These are some income tax expectations which the aam aadmi has from the government.

Increase in exemption limit for housing loan interest

The tax benefit on housing loan interest for self-occupied property has remained constant at Rs. 1.5 lakh since 2001. However, real estate cost has increased many times and so is the quantum of loan which needs to be availed. An increase in exemption limit for self-occupied property to Rs. 3 lakh can result in additional tax savings and will also help the realty sector.

Increase in the basic exemption limits

Many people are expecting an increase in the basic tax exemption limit from Rs. 2 lakh to Rs. 3 lakh. This will help all the tax payers who are filing their tax returns.

Restoration of standard deduction

Till 2005, standard deduction was allowed for salaried tax payers. However, it was later removed. Providing standard deduction helps in achieving parity between salaried individuals and people earning business income as they can claim expenses from their business income. A standard deduction of Rs. 50,000 will be a welcome change.

Increase in exemption limit for medical expenses

Currently, medical expenditure reimbursed by employer is tax exempt up to Rs. 15,000 per annum. This limit was set in 1998 and has not changed since then. Given that the cost of medical care has consistently increased, it will be a welcome step for the government to consider increasing this limit to Rs. 50,000 per annum.

Increase in exemption limit under section 80C

At present, tax deduction under section 80C combines a whole lot of investments and expenses under the Rs. 1 lakh limit. Tax deduction is an important incentive for many taxpayers to invest in PPF, National Saving Certificate, Post Office Deposits, Senior Citizen Saving Schemes, etc. However, keeping up with the inflation and in order to encourage higher savings, this limit can be increased to Rs. 3 lakh.

To sum up

More disposable income will increase the spending power and help the economy grow. If the government is able to bridge the gap between the fiscal deficit and the aam aadmi's expectations, it will be a win-win for all.

Vineet Agarwal is a director at KPMG. The opinions expressed here are the personal opinions of the author. NDTV is not responsible for the accuracy, completeness, suitability or validity of any information given here. All information is provided on an as-is basis. The information, facts or opinions appearing on the blog do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.

Source:http://profit.ndtv.com/news/budget/article-income-tax-expectations-from-modi-government-389330

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Raising of exemption limit for Income Tax and exemption of all allowances from Income Tax.

Shiva Gopal Mishra

Secretary

National Council (Staff Side)

Joint Consultative Machinery

for Central Government Employee

13-C, Ferozshah Road, New Delhi - 110001

No.Nc-JCM/2014/IT 

Dated: June 9, 2014

Shri Arun Jaitley,

Hon’ble Minister of Finance,

Ministry of Finance,

North Block, New Delhi

Resp. Sir,

Sub: Raising of exemption limit for Income Tax and exemption of all allowances from Income Tax.

Exemption limit from Income Tax is very low and neither realistic nor justified. It is not linked with Inflation nor is it appropriately revised every year.

Fixing of exemption limit for Income Tax is done arbitrarily. No systematic norms are followed while fixing the same. There is no transparency about the norms or policy adopted for fixing the Exemption limit for Income Tax.

Low ceiling of exemption is one of the root cause of build up of huge amounts of Black Money.

It is also a major impediment in the growth and development of the National economy as the spending by the common man gets restricted due to the low ceiling of Income Tax. This, according to experts, adversely affects the National Development as a whole.

Taxing of Dearness Allowance, House Rent Allowance and Transport Allowance etc., erodes the real income of the Salaried Class, as these Allowances are compensatory in nature and as such should be exempted from Income Tax, as recommended by the Fifth Central Pay Commission(vide Chapter 167 of their Report).

Taxing of Pension of Senior Citizens, especially Additional Pension of the very old Senior Citizens, is totally unjustified, and as such should be exempted from Income Tax, as recommended by the Fifth Central Pay Commission.

It is, therefore, requested that:-

(i) Exemption limit for Income Tax be raised to Rs. 5 lakh for Individuals, Rs. 7 lakh for Senior Citizens above 60 years and Rs. 10 lakh for the very old - above 80 years of age.

(ii) All the allowances, i.e. Dearness Allowance/Dearness Relief, HRA and Transport Allowance, may please be exempted from the Income Tax to avoid erosion of real wages as recommended by the Fifth Pay Commission vide Chapter 167 of their Report and Para 95 of Summary of Recommendations (Please see excerpts of Fifth CPC Report attached herewith as Annexure).

(iii) Fixed Medical Allowance to Pensioners may please be exempted from Income Tax as it is reimbursement of the expenses for day-to-day medical treatment.

Yours faithfully,

Sd/-

(Shiva Gopal Mishra)

Secretary(Staff Side)

NC/JCM

Encl: Excerpts of the recommendations of Fifth CPC

Copy to: All Constituent Organizations of the National Council, JCM(Staff Side) - for information.

ANNEXURE

EXCERPTS FROM THE REPORT OF FIFTH PAY COMMISSION REG. EXEMPTION OF ALL ALLOWANCES FROM INCOME TAX

The Fifth Pay Commission vide Chapter 167 & Para 95 of Summary of Recommendation had recommended as under:-

“Para 95 The Commission has felt that the salaries and pensions recommended by it are not really adequate if they are to be fully taxed. Accordingly, it has recommended that all Allowances and Pensions should be paid Net of Taxes”.

The Fifth CPC in Para 167.7 had observed as under:-

‘‘If such Allowances are taxed, then either the Basic Salary gets eroded in its real value from Year to Year or the partial Reimbursement of Expenditure incurred on certain items becomes less and less with the passage of time.  In both the cases, the objective of giving Allowances is partially nullified”.

The Fifth CPC further observed in Para 167.8 that -

“We have observed that Ministry of External Affairs pays ‘Net of Tax’ Salaries to its employees on Foreign Posting. Provision for paying Net of Tax Salary already exists Under Sec.195A of the Income Tax Act. Under the Section, employees do not have to pay Income Tax on the salaries received by them and it is the liability of the employer to pay the same to the Income Tax Department.”

“The solution to the problem of the Central Government Employees in general lies in the application of this legal provision” (Fifth CPC - Para 167.9).

Source: http://ncjcmstaffside.com/2014/raising-of-exemption-limit-of-income-tax-exemption-of-all-allowances-from-income-tax/

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Fin Min against raising Income Tax exemption limit to Rs 3 lakh

Fin Min against raising Income Tax exemption limit to Rs 3 lakh

The Finance Ministry has rejected the recommendation of the Parliamentary Standing Committee headed by former Finance Minister Yashwant Sinha on raising the income tax exemption limit to Rs 3 lakh. The recommendation was made as part of the Committee’s report on the Direct Tax Code (DTC). Adjusting the slabs will cause tax revenue losses to the tune of Rs 60,000 crore a year to the exchequer, the Ministry has said.

It has, however, agreed to the recommendation on reducing the age for tax exemption for senior citizens from 65 years to 60 years. The Ministry has also rejected the recommendation on inflation-proofing the tax exemption.

The Finance Ministry released the proposed Direct Taxes Code - 2013 on Tuesday. Of the 190 recommendations made by the Committee, the Finance Ministry has accepted 153 either wholly or with partial modifications. In his Budget speech in February, Union Finance Minister P. Chidambaram had said that the government will seek public opinion on the revised DTC.

Earlier, the UPA Government had introduced the DTC Bill in the Lok Sabha in 2010 and later referred to the Committee. The revised DTC Bill will now be re-introduced in Parliament by the next Finance Minister post-elections.

The Parliamentary Committee had proposed no tax on income of up to Rs 3 lakh per annum; at the rate of 10 percent for Rs 3-10 lakh; 20 percent, for Rs 10-20 lakh and 30 percent on annual income beyond Rs 20 lakh. At percent, there is no tax on income of up to Rs 2 lakh per annum. Income of Rs 2-5 lakh attracts tax at the rate of 10 percent, 20 per cent on Rs 5-10 lakh and 30 per cent on income beyond Rs 10 lakh.

The revised DTC provides for a fourth slab for individuals, HUFs and artificial judicial persons with a view to maintaining overall progressivity in the levy of income tax. If their total income exceeds Rs 10 crore, it is proposed to be taxed at the rate of 35 percent under the revised DTC.

The revised DTC also said the income from a house property, which is not used for business or commercial purposes, will be taxed under the head ‘income from house property’.

The recommendations accepted include those pertaining to simplifying the structure and the content of the DTC for making it more user-friendly and at the same time “ensuring tax buoyancy by tapping high capacity/income and evasion prone segments”.

The recommendations ministry has rejected include the one on retaining the rate of taxation for life insurance companies at 15 percent against the proposed 30 percent and abolishing the Securities Transaction Tax (STT).

The Ministry has said that the revised DTC captures all assets for Wealth Tax, whether physical or financial, thereby removing the discrimination for taxation purposes against “conservative” taxpayers who invest their savings in physical assets.

The rate for the Wealth Tax is proposed (for individuals, HUFs and private discretionary trusts) at 0.25 percent. The threshold for the levy of in the case of individual and HUF is proposed at Rs 50 crores.

The draft Code also does away with the Settlement Commission as it has “not achieved the intended purpose of early settlement of cases and additional revenue realisation”.

The DTC Bill, 2010 had provided for a 50 percent threshold of global assets to be located in India for taxation. “This threshold is too high. There could be a situation that a company has 33.33 per cent assets in three countries but it will not get taxed anywhere.

Accordingly, the revised Code provides for a threshold of 20 per cent of global assets to be located in India for taxation...” it said.

Jayesh Sanghvi, National Leader - International Tax Services, EY says, “The proposed revisions relating to the onus of proof with regard to GAAR, transition provisions with repect to tax losses and MAT credit are welcome but the one on relaxing small shareholdings from the net of indirect transfers and the reduction of the threshold from 50 percent to 20 percent for substantial value may continue to some uncertainties”.

Source:http://www.thehindu.com/business/Economy/finmin-against-raising-it-exemption-limit-to-rs-3-lakh/article5858989.ece

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Govt. to raise income tax exemption limit to Rs 3 lakh in revised DTC.

   The government will come up with a modified Direct Taxes Code (DTC) Bill after incorporating the suggestions of the Standing Committee on Finance, which among things had suggested raising annual income tax exemption limit to Rs 3 lakh.

   “Will come out with modified DTC (Bill) in response to Standing Committee suggestions,” said Advisor to the Finance Minister Parthasarathi Shome at a FICCI event here.

   He said the Finance Ministry is looking at the Bill and working on tax structures as suggested by the Parliamentary committee.

   The Parliamentary panel headed by senior BJP leader Yashwant Sinha in its report (March 2012) had suggested raising the annual income exemption tax limit to Rs 3 lakh as against Rs 2 lakh proposed in the original DTC Bill. Current tax exemption limit is Rs 1.8 lakh.

   It has also suggested that subsequent tax slabs be adjusted accordingly to provide relief to people reeling under the impact of inflation. The DTC will eventually replace the over five decades old Income Tax Act.

   “We are trying to see what could be the best in terms of transparency so that issues that are hurting industry could be covered adequately,” Shome said.

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