IT Dept in favour of re-introduction of standard deduction
November, 07th 2006
The salaried class will stand to gain if the suggestion by the Income Tax (IT) Department is accepted by Union Finance minister P Chidambaram in the forthcoming Finance Budget 2007.
The IT department is in favour of re-introduction of standard deduction for the salaried class withdrawn by Chidambaram in the 2005 budget.
"In our budget suggestion to the Finance Ministry we have suggested that the standard deduction withdrawn from the financial year 2004-05 should be re-introduced," a senior official with the IT West Bengal zonal office said.
"We have forwarded our suggestion to the Finance Ministry through the Central Board of Direct Taxes," the official who declined to be quoted said.
The Department felt that the salaried class was at a disadvantage compared to corporate entities.
"Standard deduction was given as a lump sum benefit toward cost to earn income. But, after the tax exemption ceiling on investment was raised to Rs one lakh this was abolished," the source said.
The Rs 1 lakh investment ceiling has certain advantages for business firms and corporate entities like depreciation of vehicles and cost of hiring a driver, the official said.
The standard deduction slab was Rs 30,000 for total income for the salaried class under Rs 5 lakh per annum and Rs 20,000 for income over Rs 5 lakh.
Meanwhile, the West Bengal IT circle has collected Rs 2,972 crore net corporate tax during the first seven months (April-October) of the current fiscal ended October.
This is 36 per cent rise over the corresponding period when the department collected Rs 2186 crore as corporate tax.
Personal tax collection during the period was Rs 1124 crore just nine per cent higher over the corresponding period.
"We are planning to look into why personal Income Tax growth is low," commissioner of IT, G Choudhuri said.
"We are targeting a total tax collection of Rs 9,900 crore in the financial year 2006-07. The total tax collection till October of 2006-07 was Rs 4096 crore.