Respected Finance Minister Sir, as a salaried employee, I voice the feeling of all the salaried in India. The one pain that we all face is because of the feeling that we are the highest taxed people of the country as all our income is transparent and the tax is almost always deducted at source.
Tax Slabs
Sir, my first request is to increase the tax slabs significantly. The current entry level slab and the gap between the higher levels are too low. Today a carpenter or electrician asks for Rs.750 a day as minimum wage. This means that he will make Rs.15,000/- even if he works for 20 days in a month. He goes without taxes or TDS. On the other hand if a salaried person touches the Rs.1.8 lakhs per annum slab he is taxed on his income.
Please increase the initial slab for income tax to Rs.5 lakhs. Make it atleast Rs. 3 lakhs. Also let the higher slabs have significant gap between them. As history has proven earlier, the less pain there is to pay taxes; more people will voluntarily pay their taxes. This in turn will lead to higher revenues to the Government.
The creation of a separate slab for Super Senior Citizens is highly appreciable. My grandfather has benefitted from this slab.
Tax Saving Investments
Sir, the last two years we had the support of Infrastructure Bonds apart from the Section 80C options to reduce taxes. Please consider to increase the volume of investments qualifying for the tax benefits. The Rs.1 lakh limit for tax savings is archaic and was one that you had implemented almost 10 years ago. Now that you are in power again, please make the investment quantity relevant for the current times. An increase upto Rs. 3 lakhs under section 80C and Rs.3 lakhs again for housing loan interest will be appreciable.
Please do not think that I am asking for these jumps in the tax benefits slabs out of greed. I am only bringing to your notice the current reality of high costs. Even if we buy a house with 2 bedrooms and 850 square feet of usable space (1000 square feet is what my builder bills us for), we have to spend about Rs.30 lakhs. If we take a loan for Rs.25 lakhs, we will be higher than the current Rs.1.5 lakhs slab for the housing loan interest benefit.
Service Tax for Construction
Though it is true that more and more service need to be brought under the tax net, the service tax on house construction has hit us hard. Some of us prefer to go with quality and long standing builders. Only these builders charge the service tax. Many new comers and fly-by-night builders do not charge this and show attractive rates for innocent buyers.
The other aspect of this is that the ultimate cost for us to buy houses has gone up significantly. As end users, we cannot pass this burden on to others too. Please consider removing the service tax on house construction.
Taxing Pension Plans
Sir, please consider liberal treatment for a few other avenues for tax savings. Currently the tax free commutation for pension funds is very low at one-third. The plans as of now are highly unattractive due to this.
Please make this amount fully tax free on withdrawal. This will prompt more of us in private employment to opt for contributory pension schemes like the New Pension Scheme and pension plans from private life insurance companies.
Expenses as Deduction
Sir, similar to businesspeople, please consider a few necessary expenses for the salaried such as mobile phone bills and actual office commuting cost (fuel, vehicle maintenance expenses, bus/train fare) as deductable expenses for the salaried. Cost of buying mobile phone and laptops and 3G data card may also be made deductable from income. In this modern work environment, all these gadgets have become necessary for the salaried employees.