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Small is beautiful, Mr Minister
D S MEHTA
Thanks to the six criteria -- ownership of house, car, telephone, possession of credit card, club membership, and foreign travel for filing IT return, the number of individual tax-payers has increased significantly, touching 2.5 million. The upward trend will get a further boost, if the finance minister comes out with a budget which is friendly to the small tax-payer.So, what does the common man and the small tax-payer expect in the 2000-2001 budget on February 28? The budget should not increase the prices of essential commodities of daily use. There is a mistaken belief that since inflation, as reflected by the WPI, is now an all-time low, additional burden can be imposed on common man, by hiking the excise duties on essential items of daily consumption. The prices of basic items of daily use are ruling high despite low inflation. This is because the WPI does not reflect the real price situation since common man is governed by the consumer price index (CPI). Contrary to the global practice, inflation inIndia is calculated on the basis of wholesale and not on consumer prices. The finance minister should consider the following specific suggestions to provide relief to individual taxpayers: The maximum rate of income tax for individuals should be reduced to 25 per cent from 33 per cent at present. The minimum rate could be 10 per cent. The maximum rate should be for income over Rs 5 lakh and minimum should apply up to Rs 1 lakh. This will definitely provide more incentive to pay tax, make evasion totally unnecessary, substantially reduce corruption, bring more people in the tax net and yield more revenue to the government.
The present IT exemption limit of Rs 50,000 should be raised to at least Rs 75,000.
The maximum tax rebate of Rs 14,000 at present on investment of Rs 70,000 at 20 per cent should be raised to 25 per cent. In case of authors, sportsman etc, the percentage should be 30 per cent with a ceiling of Rs 21,000.
The standard deduction should be raised to Rs 30,000 forall, without any ceiling on income, from Rs 25,000 up to an income of Rs 1 lakh and Rs 20,000 up to Rs 5 lakh at present.
Pensioners who have no other income should be taken off the income tax net. In case of others, the pension element should not be added to their income.
There should be no limit on savings, particularly when the money is deposited in nationalised banks, post offices, etc. The money so deposited should be totally exempt from tax. This will provide the much-needed funds to the government. The present ceiling of Rs 60,000 on PPF and Rs 12,000 on interest on bank deposits should be scrapped.
Medical expenses incurred in approved hospitals should be totally exempt.
Tax rebate of Rs 10,000 at present for senior citizens should be raised to Rs 20,000.
The tax on perks of salaried employees should be withdrawn.
Leave travel concession amount should not be added to the income, if the beneficiary has actually undertaken the travel. The present practice ofexempting leave travel allowance from tax only once in two years should be removed. Also, exemption should include travel in any class in rail or by air.
Dearness allowance given to compensate for the increase in cost of living should be exempt from income tax.
Ceiling on exemption in respect of gratuity and leave encashment should be removed.
There should be no cut in the present interest rate of 12 per cent on PF and PPF.
Existing IT payers should not be required to file IT returns if they are willing to pay 15 per cent more than what they paid in the preceding year. This will give more time to the ITOs to identify new assessees.
Employees, who have no income other than salaries, should not be required to file IT returns as in their case, the tax is deducted at source by the employers.The finance minister has a special responsibility towards small tax-payers, since no participant in the pre-budget discussions took up the cause of individual taxpayers. Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.
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