Budget 2012 – Income Tax
When it comes to annual budget of government, a common
Indian shows concern over the income tax rates just because this is the only
aspect of the budget which falls under the understand arena of common citizen
and affects on life style. This is the most common practice in the parliament
that usually the finance ministers are used to have few sips of waters before
reading out this section of the budget, though no one is aware about the actual
reason behind this action but probably this action of finance minister can be
justified with reason that as this section deals with drying up of funds of
common people hence minister might be in need of a wet throat to announce
it.
I think most of us will agree that income tax is the tool
which if used effectively can prove a very huge hurdle in the process of
generating the black money. Unfortunately over the years we had over looked
this effective tool just concentrating on collecting some revenue under this
head and for this we had not only kept the income tax rates higher but also
made it complicated with so many exemptions. In my view we need a very
simplified rule for this along with a very effective statement of income and
expenditures by the individuals should be made compulsory while filling the
income tax return.
My suggestions for Income tax reads like the followings: -
1] If we look the expenses of living of a family of four
in a city it comes around to minimum of Rs. 1.5 Lakh hence my first suggestion
is that annual income up to Rs. 2 Lakh will not attract any income tax and
should be considered as the tax free income for all individuals.
2] Education expenses of children is yet another major
concern of middle class economy families hence my proposal is that up to Rs.1
Lakh or actual expenses made for the education of children, which ever is
lesser should be deducted from the total income of parents. [If the husband and
wife both are earning any of them can get this exemption or both can get shared
maximum exemption of Rs. 1 Lakh]
3] Every individual will be entitled for exemption of
maximum of Rs. 1 Lakh for savings under PPF, LIC and even in mutual funds. This
one lakh will also be deducted from the total income of the individual.
4] There will be no other exemption it means if a person
is earning Rs. 4 Lakh 60 thousand and pays Rs. 80,000 for education of children
while saves Rs. 80,000 net income for the tax calculation will be Rs. 3 Lakh
out of which Rs. 2 Lakhs are tax free income and for remaining Rs. 1 Lakh will
be taxable income.
5] As individuals will have to claim educational expenses
hence this will compulsory for the schools and colleges to issue receipts for
each and every amount collected from students even the fees collected for
annual day celebration.
6] It will be essential for every citizen above 18 years
to get registered with income tax irrespective of being liable for the purpose
of income tax collection. This means every adult citizen will get a photo
identity proof, which can be useful for many purposes at many places.
7] Income Tax Slabs: individuals will be supposed to pay
income tax after deducting tax free income of Rs. 2 Lakh and exemptions allowed
as in [2] & [3] at the following rates
a] First 2 Lakh at the rate of 5%
b] Next 3 Lakh at the rate of 10%
c] Next 10 Lakh at the rate of 15%
d] Income above Rs. 15 Lakh will attract flat rate of 20%
8] There will be no surcharge of any kind. As rates are
considerably low hence there will be higher penalty say up to 70% tax for
undeclared income.
9] Our present income tax return form is not indicating
the actual assets held by the individuals hence there remains a space open for
investing black money. My last proposal is associated with the alteration of income
tax return form as the follow
Income Tax Return Form
1] Name of individual:
2] PAN Card No. :-
3] Permanent Residential Address:-
4] Present Address:-
5] Return for the Year ended on 31st December:
6] Income liable for tax during the year:
a] Total
Income
b] Less
education expenses
c] Less
saving exemption
d] Net
taxable income
7] Total Payable Income Tax:
8] Details of Tax paid / refund claims
a] Advance
tax paid on or before 15 June
b] Advance
tax paid on or before 15 September
c] Advance
tax paid on or before 15 December
d] Tax paid
before submitting this income tax return on
9] Net funds remains during the year
a] Net
taxable income
b] Less Tax
Paid
c] Less
House hold expenses
10] Details of loans, Assets and properties [including
previous two years shown in separate columns]
a] Cash Total
This year Last Year Previous
to Last Year
b] Bank Balance Total
This year Last Year Previous
to Last Year
c] Investments Total
This year Last Year Previous
to Last Year
d] Fixed Assets Total
This year Last Year Previous
to Last Year
e] Ornaments Total
This year Last Year Previous
to Last Year
f] Agricultural land Total
This year Last Year Previous
to Last Year
h] Loans Total
This year Last Year Previous
to Last Year
This information will not only help in reducing the investment
of black money in property but will also help banks and other financial
institutions to get mirror for sanctioning loan to individuals.
As the income tax for the year will be collected well
before the presentation of the budget hence finance minister will also enjoy
the comfort of knowing the actual figures.
11] Pension is not an income hence pensioner should not be
liable for any income tax, provided if they are not engaged with any earning
activity. However filling annual income tax return should also be compulsory
for these. Similarly citizen above 60 years not involved with any earning
activity and with refunds on the investments only source of earning will also
be exempted from paying income tax irrespective of amount getting as refund of
investments.
12] As number of income tax returns filled will increased
by huge hence there will be nominal charge of Rs. 100 for the filling the
return. In case of individual fails to file income tax return by 31st
March there will be penalty of Rs. 5000/- .
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