FEBRUARY 01, 2016

By S Ramaswamy

Respected FM Sir,

THERE are trade associations, trade unions etc. who gives their suggestions in anticipation of the Budget, We, the common man who elects our representatives to the Legislature, do contribute to the economy of the country. As a common man we do not have such associations, who can make our voices heard, therefore, this is ahumble request/ suggestions from a common man.

Earnestly expect that if not all, at least some of these will find in the forthcoming budget.

I. For AAM AADMI

1. Introduce Unemployment / Underemployed/ Job Loss Insurance :

Insurance is a cover the risks. We have several insurance policies in the country like Life Insurance, Mandatory Motor Insurance, Medical Insurance etc. Then why not insurance for job loss/ unemployment.

India is a large country with many people who are either unemployed or underemployed or there is a loss of job for various reasons. The individual needs to sustain his family. So, it is imperative that the Government in the absence of social security provisions can introduce an Insurance scheme for underemployed / job loss etc.

2. Increase the Limit to Forego Subsidy :

There is a proposal by the Central Government that if the income in the previous year is more than 10 lakhs then they will not be provided with gas subsidy. The limit needs to be increased to at least 30 lakhs.

3. Remove the disparity between salaried and business /Professionals:

The business/ Professionals pay the tax on the net income while the salaried class pay the tax on their gross income. Why this disparity? The law needs to be amended so that the salaried class pays the tax on their net salary rather than the gross salary.

4. Reintroduce Standard Deduction:

In the absence of any expenditure allowance to the salaried class, the standard deduction of 1/3 rd of the gross salary without any cap be re-introduced.

5. Minimum Alternate Tax for Salaried Class:

Alternatively, it is suggested similar to MAT or composition tax, the salaried class shall pay a tax at the rate of 10% on 1/3 rd of their gross salary provided no deduction is claimed under any provisions of the Income Tax Act:

This will reduce lot of paper work for the employee, employer and the income tax department and garner more revenue.

Example:

Current System

Gross Total Income :	10,00,000
Less: Section 80C :	2,00,000
Less: Section 80D :	15,000
Less: Section 24 :	2,00,000
Less: Medical Reimb :	15,000
Less: Conveyance :	19,200
Less: Prof Tax :	2,400
Less: NPS :	50,000
Net Salary :	4,98,400
Basic Exemption :	2,50,000
Taxable Salary :	2,48,400
Tax @ 10% :	24,840

Tax as per Suggestion:

Gross Salary :	10,00,000
1/3 Salary :	3,30,000
Tax @ 10% :	33,000

Increase in Revenue of Rs 8160 plus reduction in paper work, more efficiency, simple documentation, simple calculation.

For the employer and the employee- Less or no paper work, simple documentation for filing return, no need to retain documents or evidence of claiming exemption, hassle free.

6. Allow set off to the salaried class:

The business / professionals are allowed to set off their indirect taxes against their output liability while no set off is available to the salaried class. The indirect tax borne by the salaried class be set off against the income tax paid by the salaried class. Practically, it shall be difficult for the individual / department to maintain documents, so to simplify a sum of Rs 50000/- paid as tax by the individual be allowed as set off against the income tax payable.

Average expenses per month Rs 15,000/- pm that translates to Rs 1,80,000/- pa. The rate of tax (ED /ST + VAT) is 28%. The tax paid on the consumption is Rs 50,400/- on an average.

7. Enhance the Transport Allowance:

The transport allowance was enhanced to Rs 1600/- pm last year after several years. For a commuter in the city bus, he spends at least Rs 75/- per day on the average which translates to Rs 2250/- pm. For the other mode of conveyance (say two wheeler), the person consumes at least 30 litres of petrol a month which translates to Rs 1950/- pm (at the minimum). So, it is prudent that the transport allowance be increased to at least Rs 2500/ pm from Rs 1600/-pm.

8. Enhance the Limit of Medical Allowance:

Last budget Section 80D limit was enhanced to Rs 25,000/-. The medical insurance caters only if there is a hospitalization and not for the domiciliary. The medical insurance does not cover dental treatment. The cost of dental treatment is too high. Further it covers only the allopathy treatment. Today, the other treatments like Homeopathy, Ayurvedic, Unani etc have gained importance and the cost of the treatment is also high. The cost of medical treatment is exorbitant today. The limit of Rs 15,000/- is too paltry and that needs to be increased to at least Rs 50,000/-.

Further, the medical insurance should cover all forms of treatment and not only restrict to allopathy, dental treatment etc.

9. Income Tax paid and the Pension:

The income tax paid by the individual in his prime years (or during employment) be provided as pension on his retirement instead of seeking for a different fund as pension fund.

10. Enhance the limit of Drivers salary allowance :

As per the latest pay commission, the minimum salary is Rs 18000/- whereas for income tax, the limit for driver salary is still Rs 900/ pm which is much below the Minimum Wages Act. This limit may be increased to Rs 15000/- pm.

11. Enhance the Limit of Interest on Housing Loan

The rate of interest is high. As such, the current limit of Rs 2 Lacs on housing loan be increased to at least Rs 5 lacs.

12. Enhance the basic exemption limit

The latest pay commission has enhanced the salary for the people working in central government wherein the minimum salary is Rs 18,000/- pm that translates to Rs 2.16 lacs. The limit of Rs 2.5 lacs is too meager considering the scale. We, therefore, earnestly seek the enhancement of basic exemption limit to Rs 5 lacs.

II. FOR THE BUSINESS/ PROFESSIONAL:

1. Cenvat Credit Rules:

The definition of Input, Input Services and Capital Goods be modified stating that all goods or services except those as per the negative list of goods/ services for cenvat Credit. This will not only reduce litigation but also "EASE OF DOING BUSINESS".

2. Self Credit of Refund:

Today to get a refund from the Central Excise/ Service Tax/ Customs is an herculean task which creates unhealthy atmosphere between the trade and the department. Huge Funds are blocked for the business for the want of granting refunds. The Board issues circulars stating that at least 80% of the refund be granted forthwith but the field formations has scant respect for such circulars.

Inspite of Tribunal and Court decisions, the department deny the refund citing an appeal is filed inspite of judgments and circulars/instructions of the Board stating that refund should not be withheld on the ground that an appeal is filed or the department is contemplating to file the appeal against the order.

Suggestion: The asseesee be allowed to take self refund on a declaration after submission of documents for refund within the stipulated time. On scrutiny/ verification, if the department is of the view that the refund is not eligible, then an order be passed to recover the refund with interest and penalty subject to following the process of natural justice. This will help the assesse as well as the Government's motto of "EASE OF DOING BUSINESS".

3. GST/CGST

In case the GST is not passed in the budget session, the Central Government can introduce CGST and IGST as a step, the success of which will pave way for the GST across the country. CGST to replace CEA, Finance Act, 1994 while the IGST shall replace the CST act.

IGST can be allowed to set off against CGST or IGST or vice versa. This will not only improve the tax compliance but also reduce the litigation, more revenue to the Government etc.

If not, at least allow the Central Sales Tax to be set off against the Central Excise Duty or Service Tax and similarly the Excess Central Excise duty or Service Tax to be set off against Central Sales Tax.

4. Single Definition across various Statutes:

Central Excise, Customs, FTP all should have the same definition say for exports. The benefits should be provided to both Physical and Deemed. If the FTP allows for benefits for Deemed Exports, then CE and Customs to should provide for such benefits. This will reduce litigation and "IMPROVE EASE OF DOING BUSINESS".

(The author is Chief Commercial Officer, Nash Industries (I) Pvt Ltd, Bangalore and the views are strictly personal.)