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Budget Expectations - Vikas Vasal, Partner - Tax, KPMG in India


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Vikas Vasal, Partner-Tax, KPMG in India shares his Budget expectations from the government

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Budget Expectations - Vikas Vasal, Partner - Tax, KPMG in India

  1. 1. 1 Barboza, Melvin Sent: Tuesday, January 21, 2014 10:12 AM Subject: Budget Expectations - Girish Vanvari Budget Expectations - Vikas Vasal There is a lot of hope and expectation from the new government. Rising  inflation  has  been  a  cause  of  concern  for  the  people. Therefore, it is natural for individuals to expect some relief from the new government.  Hence, the following points merit attention.    First,  the  tax  slab  rates  need  revision.    The  basic  income threshold  of  Rs  2  lacs,  above  which  the  tax  liability  gets triggered  is  quite  low  and  should  be  revised  to  Rs  3  lacs. Similarly, other slab rates should also be revised to leave more money in the hands of the households.     Second, increase the annual tax deduction under Sec 80 C of Rs 1 lac to Rs 3 lacs.  This popular deduction of Rs 1 lac for various  investments  /  expenses  like  PF,  PPF,  and  Insurance Premium etc. has not kept pace with the rising inflation.  It is pertinent to note that this deduction helps people in taking investment decisions and encourages them to save for their long term requirements.     Third,  deduction  for  interest  on  housing  loan  for  a  self‐ occupied  house  property  currently  capped  at  Rs  1.5  lacs should be revised to Rs 3 lacs in line with the rising housing costs and interest rates. Besides, being a good investment, a house also provides emotional and psychological comfort to a family.  Therefore, this deduction should be doubled.     Fourth, various other deductions / exemptions like benefit for medical  expense  reimbursement  of  Rs  15,000  per  year, conveyance allowance of Rs 800 per month. etc. have outlived their  utility.    These  benefits  should  either  be  enhanced substantially  in  line  with  the  current  economic  reality  or scrapped  altogether  and  instead  clubbed  in  the  form  of  a standard deduction / allowance to make it a more meaningful benefit.     Fifth,  widen  the  tax  base.    Currently,  only  a  very  small percentage of the population of our country pays income tax and files tax returns.  The government should take steps to widen the tax net and thereby reduce the effective tax rate for all the individuals. Standard Deduction may be re‐introduced to bring in parity between ‘salary’ income earning individuals and ‘business’ income earning individuals.     Sixth, conveyance allowance of Rs 800 per month should be revised.     Seventh,  Inter‐face  with  tax  administration  should  be minimized and be made more tax payer friendly.  For example, tax refunds of all amounts should be credited directly into the bank account of the individual, instead of sending the refund cheque.     Though this wish list could go on, nevertheless, the above steps if implemented  in  right  earnest  would  bring  some  cheer  to  the common man.  Vikas Vasal Partner - Tax KPMG in India © 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.