The Hindu Business Line : Tax relief to women, senior citizens cost exchequer over Rs 3,000 cr

Chennai, July 6 The Government pegs the tax concession granted in 2008-09, to senior citizens and women at Rs 3,184 crore, Budget documents reveal. However, the quantum of revenue foregone in 2008-09 is lower than its own estimate for 2007-08 at Rs 4,098 crore.

Senior citizens (tax payers above 65 years of age) and women other than those already classified as senior citizens enjoy higher tax exemption . The higher basic exemption limit in 2007-08 was Rs 1,45,000 for women and in the case of senior citizens, Rs 1,95,000, the document claims.

It argues that the higher exemption limit resulted in the Government losing potential tax revenues relative to those imposed on others and estimates such tax loss respectively, at Rs 3,605 and Rs 13,390 for each woman and senior citizen.

There were in all 2,66,18,409 tax paying assessees during that year. A sample analysis of returns filed by them revealed that approximately 4.8 per cent of them were senior citizens and another 30.6 per cent of them, women. Extrapolating the sample data to the population of tax paying individuals as a whole, the Government document goes on to claim that it should have received Rs 1,711 crore in additional revenue from senior citizens and a further Rs 2,387 crore from women in 2007-08 had these categories of tax payers not enjoyed the benefit of a higher exemption limit under the income-tax law.

It then goes on to assume a growth of 5 per cent in such categories of tax payers in 2008-09. However, due to a change in tax exemption limits across all categories of tax payers, the loss in tax revenue foregone now stands at Rs 3,090 (women) and Rs 7,725 (senior citizens). Consequently, the overall revenue loss now stands at Rs 2,148 crore and Rs 1,036 crore respectively, the document contends.

Besides higher exemption limit for select class assessees, the tax code contains many incentives whose application results in the loss of revenues in the case of those eligible to avail themselves of these benefits. Such tax preferences also add to the total figure of loss, the document explains. Overall, such loss stood at Rs 34,437 crore in 2008-09, a rise of close to 3.5 per cent over the previous year.

The tax loss suffered on account of concessions to individuals, however, compares favourably with those extended to the corporate sector. Thus, the Government lost in 2008-09 no more than 6.5 per cent of what it should have collected through tax concessions extended to individuals and small businesses.

In contrast, loss to the Government on account of similar facilities to the corporate sector by way of income-tax foregone was 11.36 per cent, that on excise and customs at close to 58 per cent in potential tax revenues, says the Budget document.