From the assessment year 2006-07 standard deduction has been removed. There is no deduction available to the salaried class. Individuals having business have to pay income-tax on their net income after allowing related business expenditure. For salaried class, no expenditure other than house rent allowance is permissible. Many cases a middle-class employee is not able to invest Rs 1 lakh per annum. In the assessment years 2004-05 & 2005-06, if the salary does not excee d Rs 5 lakh, 40 per cent of the salary subject to a maximum of Rs 30,000 was allowed as standard deduction. The Finance Minister should consider some sort of deduction to the middle-class salaried people.
Currently, there is no incentive for investors in banks or financial institutions. Dividends are exempted from tax. Whole interest income is taxed. The Finance Minister should restore Section 80L for deduction for interest income.
Subrahmanya Bhat K.M, Senior Lecturer,Dept.of Commerce, Shreee Damodar College of Commerce & Economics, Margao-Goa.