Tax slab rates should be rationalised. As the slab rates have remained unchanged for the last three years, it is reasonable and justified and suggested for a change as follows. The implementation of Sixth Pay Commission report as well as growth in employment opportunities in information and technology sector will compensate the same with a wider tax base.
The deduction available under Section 80C needs revision as the amount of Rs 1 lakh allowable as a deduction from the taxable income on investment in the prescribed savings instruments such as life insurance premium, PPF, PF etc. have been further increased with tuition fees, fixed deposit and post office savings scheme etc. without any corresponding increase in the existing ceiling limit. Even the section 80CCC on pension scheme contributions were also merged with the above 80C.
To make the long-term investment more attractive and serve as a social security measure, the limit needs to be revised to Rs 1.5 lakh. Separate limit can be kept for such long-term investment, as it will encourage national savings and investment.
The announcement regarding the new income tax code is expected in the Budget. The reason for tax evasion may be either due to the complexity of tax structure and high tax rates or due to the tax administration by itself not able to fulfil the revenue objectives. In practice, it is seen that both tax policy and tax administration have mutually affected. R.Sundararaj, Manager (Finance),