Make it less taxing

Indraneel R Chaudhury | Updated on July 09, 2014

Empty wallet No one wants one

Inflation burden has been bad enough

Today, when the new Finance Minister to a new Parliament rises to present the Budget, it will be witnessed not just by the people of the largest democracy, but also by multiple investors across the world. Expectations are running high on the Government’s ability to initiate steps to boost the much-needed investor confidence and formulate a plan of action to revive the economy.

Like investors, individual taxpayers have their eyes firmly set on the Budget. They will closely scan the tax budget proposals, with the key objective of having more cash in their pockets.

Customer focus

A prelude to this year’s tax budget expectations has been laid out in Parthasarthy Shome’s ‘Tax Administration Reforms Committee Report’, where the “customer focus” objective of tax administration has been emphasised yet again. It has always been the expectation of the common man that he or she will take more money home as a result of any Budget proposal.

The wish-list would include an increase in the standard exemption limit for men, women and senior citizens, and an increase in the limit for deduction on housing loan interest on self-occupied house property. The latter is expected to rise from the existing ₹150,000 to at least ₹300,000 per year due to the steep rise in real estate prices and interest rates over the past several years.

Similarly, an increase in deduction for tax savings payouts (such as life insurance premium) from the existing ₹100,000 is also expected — as also an increase in deduction for health insurance premium to factor in rising medical costs. For salaried employees, the threshold set for education for children, transport allowance, medical expenses and medical reimbursements, allowable exemptions for house rent allowance, which are archaic, should be substantially enhanced given the inflationary pressures.

Education, health and more

Quicker processing of tax refunds for the salaried class would also be an important demand. From an investment standpoint, revisiting the Rajiv Gandhi Equity Savings Scheme (RGESS) would be beneficial so as to try and extend the benefits to all new investors (or increasing the threshold limit on annual income to promote investments).

A general demand would be enhancing access to education and health by lowering cost. This is important given the shift in demographics in the country; it will help mobilise the youth to become the engine of the country’s growth. Providing the youth with easy access to financing education in the form of lower interest on loans would be highly welcomed. Support for setting up low-cost medical assistance through financing and tax incentives would be the other imperatives.

Building model cities for better living and good infrastructure has been a common cry for a very long time. After all, the common man also pays taxes to usher in “civilisation” and expects his/her taxes to be put to good use in building basic infrastructure facilities and providing allied services. So, can the aam aadmi look forward to good days? The Finance Minister will have all the answers today.

The writer is the executive director of Tax and Regulatory Services at PwC India

Published on July 09, 2014

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