Exemption limit: The basic exemption limit, currently at Rs.180,000, could be increased to at least Rs. 240,000 so that persons who earn income up to Rs.20,000 p.m. would not be subject to tax. This will give a fillip to industry as well, as the purchasing power would go up. Corresponding limits for senior citizens could be extended to Rs. 300,000. Slab rates may also be changed suitably to make the 30 per cent rate applicable only to income exceeding Rs 10 lakh.
Housing: In spite of providing incentives in this sector, buying a home remains stubbornly out of reach of the middle-class. Cost of an apartment has sky-rocketed, not only in the metros but also in the smaller cities making it difficult to service loans. Interest rates have increased but related tax deduction has remained the same since 1999 - Rs.150,000 per annum for self-occupied house property. It is high time this limit was raised to Rs 300,000 per annum.
Education: Education is imperative for the socio-economic development of any country. The government has done woefully little to increase quality educational institutions. Education of children in private institutions is perhaps the most expensive investment that parents have to make. However, expenses on education do not qualify for any special deduction. A separate deduction should be allowed for education expenses (which should include admission/term fees paid apart from tuition fees). Alternatively, the cap for section 80C should be raised to Rs 2 lakhs. This will also make additional charges imposed by educational institutions more transparent.
Medical costs: Senior citizens in India get a raw deal. There is no social security coverage and many individuals do not have medical insurance and are not likely to get any at that age. Good medical treatment is available in privately run hospitals which are expensive. Medical treatment of senior citizens should be eligible for additional deduction in the hands of the person paying such bills.
Employees' angst: Salaried individuals are the most compliant today as any kind of emoluments /benefits are usually fully taxable and subject to TDS. However, the valuation rules for taxation of perquisites and benefits are still very cumbersome both for employers and employees to follow. The exemption limits are very low in respect of certain allowances/benefits (not having been revised for years!). Fuel reimbursements by employer to employee should be treated similarly irrespective of whether car is owned by employer or employee. The existing provisions substantially increase the taxable value of fuel reimbursements if the car is owned by the employee, unless the employer is ready to take on additional administrative burden of maintaining log books, etc. So long as the car is used for the same purposes (i.e. both for personal and business purposes), for benefit valuation purposes, it should not matter who owns the car! For exemption in respect of House Rent Allowance, a different comparable is used for Delhi, Mumbai, Kolkata and Chennai (50 per cent of salary) as against rest of the cities (40 per cent of salary). Cities like Bangalore, Hyderabad, etc. have also caught up with these metros in terms of cost of living. The comparables should be revisited to factor in the change in cost of living in Tier-2 cities also.
These are some of the bare essentials with which the common man struggles and desperately needs some relief.
Sundeep Agarwal is associate director, tax & regulatory services, PwC India; Ishita Sengupta is senior manager, tax & regulatory services, PwC India