AIBOC CIRCULAR NO. 133 ON SIMPLIFICATION OF TAX LAWS

AIBOC issued its circular No. 133 on simplification of tax laws. We are reproducing the same here for our readers.

CIRCULAR NO: 133                           25^th SEPTEMBER, 2010

TO ALL AFFILIATES/MEMBERS:

SIMPLIFICATION OF TAX LAWS

One of the issues taken up by the Confederation with the Government of India is simplification of tax laws.  We have today sent a communication to the Hon’ble Finance Minister, Government of India, with our suggestions on the Direct Tax Code Bill pending before the Parliament for approval, a copy of which is appended for your information.

With greetings,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

No. 1454/309/10                             Date: 24.09.2010

The Hon’ble Finance Minister

Government of India

Parliament Street

New Delhi

Respected Sir,

DIRECT TAX CODE

It is a matter of great pleasure that you have been kind enough to have proposed the retention of certain existing provisions of IT Act pertaining to the individual tax payers in the Direct Tax Bill introduced in the Parliament. It is also appreciable that some improvements in slabs, removal of surcharge and cess, have been made. We are submitting following few suggestions in respect of personal taxation, especially salaried class, for your kind consideration.

Slab Rates:

The earlier provision in DTC for  personal income tax slabs may be retained as

Upto Rs.10 lacs	10%
Above Rs.10 lacs to Rs.25 lacs	20%
Above Rs.25 lacs	30%

Depreciation:

Out of the various categories of individual tax payers, only salaried tax payer are not eligible to claim the deduction of depreciation on the assets owned by them. Therefore, to give equal treatment to salaried class, the deduction towards depreciation of assets should allowed for them also.

Investment Avenues:

The followings additional items should be allowed to be considered for eligible investments for deductions under 80 (C)

Ø      Housing loan repayment (principal) amount

Ø      Mutual fund investments in tax saving schemes

Ø      Deposit with Banks having maturity period of minimum 3 years.

Leave Encashment:

The entire amount of leave encashment on superannuation be exempted from tax, without any limit.

Leave Travel Concessions:

Since, Leave Travel Concession is for rest and recuperation which will rejuvenate the employees to contribute their maximum to their performance and   as no pecuniary benefits are derived out of the LTC by the employee, we suggest to exempt encashment of LTC benefit from payment of tax.

Similarly, leave encashment availed by the employees at the time of availing LTC should also be exempted from payment of Income Tax.

House property income:

In view of escalating cost of repairs and maintenance of the house property, 40% of gross rent should be available for deductions from taxable income towards repairs and maintenance instead of reducing the percentage to 20%

Deduction should also be allowed from the gross rental income towards the amount paid for brokerage to the broker for arranging a tenant.

Deduction under 80GG for the house rent:

The ceilings of Rs. 2000/- p.m. should be enhanced to Rs. 25,000/- p.m. because the existing ceilings were decided decades back.

Deductions for News papers, books etc:

Deductions should be introduced for the amount spent by the employees towards the purchase of news paper, books, periodicals etc as the same are used for the updating the knowledge.

Standard deduction:

Till few years back the employees were eligible for Standard deduction upto certain ceilings from taxable income. This was unjustifiably discontinued. The employees are not eligible for deductions available to professional and business community. Therefore, the standard deduction be re-introduced.

Income tax rebate:

Deduction under 80 (C) be continued to be with the option to investor. Total deductions in this section be made upto Rs. 5, 00,000/- p.a.

Ø      Life insurance policies upto Rs. 1,00,000/-

Ø      PPF upto Rs. 1,00,000/-

Ø      Other investment for the balance amount

Mediclaim insurance premium upto Rs. 25,000/- to be allowed as separate deduction from taxable income as is being permitted presently.

Fringe benefit tax

Tax on perquisites and fringe benefits has caused a great burden to the officers in the Banking Industry. Therefore, tax on fringe benefits /perquisite be borne by the employer.

Similarly tax on value of free or concessional medical treatment, medical expenses reimbursement being welfare and social security measurers, tax on the same should be withdrawn.

We shall be highly obliged, if the aforesaid suggestions on personal tax structure are considered favourably by your good selves while passing the Direct Tax Bill.

With greetings

Yours faithfully

Sd/-

(G.D. NADAF)

GENERAL SECRETARY