Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: form 3cd :: VAT Audit :: articles on VAT and GST in India :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: VAT RATES :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt
General »
 Banks warn share tax hike threatens Paris' post-Brexit appeal
 PMC may decide on property tax rebate for IT firms this week
 I-T Dept is giving out certificates of appreciation. Have you received yours?
 Government works on ironing out benefits refund mechanism for exportersa
  Tax officials are using an IDS provision to question transactions beyond six-year-limit
 Tax-free bonds rally like midcap funds
 Senior citizens do not have to pay advance tax on salary and interest income
 GST: Audit commissioners to get adjudication powers
 Interest on NRE rupee account can be exempt from tax under FEMA
 Impact of GST on Real Estate Sector
 GST regime: Tax payers allowed to take option of third-party interfaces

Can Arun Jaitley afford to play tax messiah this budget?
June, 09th 2014

The new government may have inherited an economy with a stretched state of finances but that has not curbed expectations that a friendlier income tax regime for individuals may be on its way.

Several reports have indicated Finance Minister Arun Jaitley may provide greater tax exemptions to individual taxpayers when he presents the budget for fiscal year 2014-15 sometime in July.

According to a report in the Economic Times today, financial-market regulators have suggested the government to consider raising the income-tax exemption limit under Section 80C from the current Rs 1 lakh limit.

The 80C tax provision allows individuals to lower their taxable income by that amount by investing in any combination of popular tax-saving instruments such as public provident fund, equity-linked saving-scheme (ELSS) mutual funds or unit-linked insurance plans (ULIPs), among others.

The ET report does not specify by how much have the regulators suggested the government consider raising the 80C limit.

Additionally, other reports have said the finance minister may allow for greater tax exemptions in sections other than 80C – such as doubling the exemption limit towards investment in health insurance (under 80D) from the current Rs 15,000 per year.

There has also been talk about introducing other tax-exemption vehicles that would facilitate investments in sectors such as infrastructure similar to a scheme launched by erstwhile FM P Chidambaram who launched long-term tax-free infra bonds in 2011.

The country’s tax structure has been the subject of much debate in the recent past, with about 4 lakh people paying over 60 percent of income tax collected in the country.

Further, given the persistently high inflation of the past several years, most tax-exemption limits that were set years ago look severely dated.

For instance, the tax benefit on housing loan interest was set at Rs 1.5 lakh was set in 2001 (even as property prices have zoomed several times since) while the reimbursement for medical expenditure at Rs 15,000 a year was decided in 1998, points out KPMG director Vineet Agarwal in an article on

In the piece, Agarwal argues the government should consider raising the basic exemption limit from Rs 2 lakh to Rs 3 lakh, double the housing loan interest benefit to Rs 3 lakh, treble the 80C exemption to Rs 3 lakh and increase the medical reimbursement to Rs 50,000 from Rs 15,000 currently.

Such steps should have several cascading effects on the economy, by putting more disposable incomes in the hands of the consumer, it would help kick-start the slow economy while spurring critical sectors such as real estate.

But much as the expectations may be, the new BJP government -- which has in recent years projected itself as having a reform-oriented, low-tax philosophy -- may find the current state of economy to be a challenge.

For one, the steep fiscal deficit, which is the difference between the government’s yearly revenues and expenditure, is likely to keep the government from letting go of tax revenues.

Already, there is talk the tax department may find it extremely difficult to meet the 18 percent tax revenue growth target outlined by Chidambaram in the February interim budget.

To make up for lost revenues resulting from higher tax-exemption limits, the government will need to bring in several long-debated tax reforms that will widen the country’s narrow tax base – such as starting to tax agricultural income or bringing in the direct taxes code and the goods and services tax.

With the budget likely to be presented in a month’s time, the new FM clearly may not have too many options currently.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Publishing Management System PMS News Management System Publishing Management System Development Online News Management System for media company custom Publishing management system development Survey management system Market Res

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions