It is human nature that one always expects more and more relief from the Government when it comes to taxing the people. In our country, direct taxpaying population is much less than what is desirable and not without a valid reason. There is a great divide between rich and poor and it is always felt that poor are being taxed at the cost of rich….. is this true? Well I leave it to the imagination of people to answer that.
So once again the season of Budget 2016 is on and so are the expectations. I would like to place following for the consideration of the readers since Finance Minister (FM) has already finalized the Budget and changes would be possible depending on the reactions in post Budget presentations.
Expectation from Industry in general would be to have long term consistent tax policies without any tinkering in every budget. In last year’s budget, the announcement of tax rates for next 4 years was a welcome step in this direction.
It will be just and fair to remove dividend distribution tax and have the dividend taxed above a particular thresh hold so as to benefit the small time investors. The limit could be say Rs.25,000. If this is not done, what really happens is that promoter shareholder or shareholders with large holdings, majority of whom will be in tax bracket of 30% (plus surcharge and cess thereon) get away with much lower tax in the form of dividend distribution tax and that also goes out of kitty of corporate entity.
There is no doubt that the tax collected from small tax payers in the tax bracket of below Rs.5 Lakhs is not enormous in value but number of tax payers are huge. Just to have them for sake of showing “number of tax payers” in the country is too vague a reason. The time and effort which income tax department (ITD) spends on these tax payers is not worth the collection. If same time & efforts be diverted on high value tax payers, it would certainly provide better rewards to ITD.
So I expect the FM to do away with the first tax bracket of Rs.2.50 to Rs.5.00 Lakhs. Change the 10% rate bracket to above Rs. 5.00 Lakhs to Rs.10.00 lakhs; 20 % to above Rs.10.00 lakhs to Rs.20.00 Lakhs and 30 % to above Rs. 20.00 Lakhs.
These are suggested after keeping in mind the cost of living in metro cities where the major such tax payers reside.
Another area of expectation is in the field of petty exemptions presently available. These need to be either removed or amount need to be enhanced considering factual situation prevalent today. Just to give a small example – Rs.100 is exemption for education of a child…. now what does one say about this amount. Nothing more needs to be mentioned I suppose.
My expectation from FM is to bring in time bound response from ITD on the issues raised by tax payers. This should be monitored online by Chief Commissioner of Income Tax and a report made on the pending issues beyond say One/Two month/s. This is absolutely necessary for respecting the need of tax payer who is made to run from pillar to post for small issues which do not get attended until personally followed up continuously by tax payer. These are basic issues.
It is seen that Permanent Account Number (PAN) does not get transferred from one jurisdiction to another within the ITD. Tax payers suffer lots of inconvenience due to this for no fault of their. This process should happen in a simple, fast and smooth manner online.
Hopefully these are the expectations of our FM also !!!!!