Following are some suggestions for adoption in the forthcoming Budget for FY 2022-23.
1. Withdraw the Dividend tax of 10 % on Investors and reimpose it on Companies/MFs
Senior citizens, who largely rely on dividend income for meeting their expenses find this 10 % cut very substantial, made even more so, when Annual Inflation is 5 % +.
If some of us are entitled to "not pay this 10% tax" it involves filling 15G/15H forms for each Company/MF which is very cumbersome AND/OR making refund claims for which we invariably have to take help of CAs which involves a substantial cost.
Finally, Companies/MFs, by and large, have been doing extremely well and are poised to do even better with your policies ; hence, they will not find it difficult at all to bear this tax, which they were anyway paying earlier and had no real objection to the same.
Also, when Companies pay this Dividend Tax, they will be filing just ONE TDS Return Return. However, when they are required to deduct it from Investor’s dividends they will have to issue well over 10 to 12 crore TDS Returns (Form 16) because of the number of investors per company and per Mutual Fund. This is a substantial Administrative Burden that will also strain the IT backbone.
2. Increase Sec 80C Deposit Limit to 2.5 Lakhs by increasing it by Rs. 1 Lakh only for PPF and at the same time pay 2 % LESS interest on this additional 1 lakh PPF Deposit to limit Govt costs.
This will help many
people to reduce their tax bracket or even come out of Income Tax Payment
bracket which will be a great relief. At the same time, Govt costs
are partially controlled by paying lower interest on the additional amount, as
suggested.
Previously, the NEW REGIME was of benefit to only those earning below Rs. 12 lakhs per Annum – now it will become attractive to also those that are earning close to Rs. 20 lakhs per annum which will cover more than 80 % of Income tax payers.
At the same time the adoption of NEW TAX Regime by all will substantially plug leakages and reduce need for documentation in areas like House Rent and LTA Claims and bring substantial “Return Processing” relief to the over-burdened Income Tax Department.
4. Scrap the Tax imposed on Long Term Capital Gains but increase the definition of Long Term from 1 year to 3 years
This will be a big relief for the average citizen and will be received with great deal of joy and enthusiasm by the entire citizenry.
This will also be a
BIG RELIEF to the IT Department from having to scrutinise each claim of
Capital Gains Tax Liability reduction or exemption.
The objective of proposing an increase in the “Capital Gains qualifying period from 1 to 3 years” is to ensure that there is far less volatility in the Capital markets from frequent and irresponsible short-term selling/withdrawal.
The Revenue Loss,
if significant, may be made up by having a Capital gains Tax which is
2 percentage points higher than the individual’s or Corporate’s applicable Income Tax Rate. This will be a straightforward tax that does not involve any documentation, calculation
or CA assistance.
5. The limit for Sec 54E Deposits for claiming Capital Gains Tax Exemption be raised from present Rs. 50 lakhs to Rs. 2 Crores
The limit of Rs. 50 Lakhs was fixed over 20 years back. Clearly the gains occurring these days are in Crores, especially for Old Property (land or building). Hence, it is only fair that this limit be revised to a more reasonable level.
If this is done it will encourage much greater transparency and disclosure of ‘actual transacted amounts” fetching good Stamp Duty Revenue for the Government in all states.
Will encourage more accurate and higher disclosure which will translate to bigger “Stamp Duty” revenues for the State Governments.
The above recommended
measures will win you a lot of applause and enthuse the Middle Class who have
been at the receiving end for the past 2 years.
It will greatly help
to defuse the sombre mood and gloom that pervades the nation today in view of
the re-emergence of the CORONA spread, as also the pain that the Middle Classes, in
particular, feel due to their loss of income and their well-being, being,
relatively, ignored by the Govt, vis-à-vis what has been done for other
socio-economic groups. Such relief will greatly brighten their days.
Mumbai
11 January 2022
