As regards personal income tax, the exemption limit for individuals is to be raised to, at least, Rs 60,000. The threshold for the initial rate of 10 per cent should also be raised to Rs 1,50,000. The maximum rate of 30 per cent should be made applicable to a total income of Rs 5 lakh only. As regards the amendments to the Income-tax Act, 1961, an urgent reform that is needed is in relation to the salaried class, particularly in view of the harsh rules for valuation of different types of perquisites.
For the purpose of boosting newly constructed houses, a five-year tax holiday should be allowed under Section 23, if the plinth area of the house does not exceed 80 sq meters on the analogy of tax holiday for new residential units which was in vogue till March 31, 1992.
The threshold for compulsory audit under Section 44AB for business concerns having a turnover of over Rs 40 lakh and professional persons having gross receipts of over Rs 10 lakh was introduced in 1984. Since then the value of money has eroded a great deal. Hence, the threshold for compulsory tax audit should be raised to, at least, Rs 1.2 crore for business income and Rs 30 lakh for professional income.
The threatened withdrawal of reduction of the deduction for bank interest, etc, under Section 80L should rather be increased to Rs 25,000 to give some relief to retired persons and fixed income people because of heavy reduction in interest rates recently.
There should not be any sub-limit like Rs 20,000 for repayment of housing loan etc. for the purpose of rebate of 20 per cent under Section 88. Freedom should be allowed to the taxpayers to make investment in any of the approved modes to avail of the full tax rebate.
(The writer is a senior tax consultant at Delhi, and is the President of the Income-tax Payers Association)