The Background:
‘Axe The Tax’ started as a campaign to bring the views of the common man to the government. Started in 2007, it focuses on personal tax laws which the consumer finds unfair, and would like modified or done away with. In the decade since the inception of the campaign, some of these suggestions have found a mention in the Budget. These include a hike in the savings cap for senior citizens, an increase in transport allowance and a hike in health insurance benefits.
In this, the 10th year of our campaign, CNN-News18 would like to present to you six tax provisions which need changing. The modifications are based on viewer feedback on CNN-News18’s website www.news18.com, and from consultations with tax analysts across the country.
This year’s suggestions:
RAISE THE DEDUCTION LIMIT UNDER 80C
Under Section 80C of the Income Tax Act a deduction of upto `1.5 lakh is allowed for investments. The investments eligible under this section cover a wide range from repayment of housing loan, PF, life insurance, pension to post office savings schemes and education of children. The cap under Section 80C should be increased to between 2 to 2.5 lakhs a year. This will encourage individuals to save for their retirement and increase the savings rate
RAISE BASIC TAX EXEMPTION LIMIT
The basic tax exemption limit is 2.5 lakhs, rising to between `3 and `5 lakhs for senior citizens. It has stayed at this level for the last 2 years. There is therefore room to raise this limit, even by a modest amount. Keeping the low tax base in mind, the limit could be raised to `3 lakhs. There should be similar hike for senior citizens.
CAP CASH TRANSACTIONS
After demonetisation, cash was deposited in a large number of accounts. Keeping that in mind, the Government could expand the scope of reporting cash assets, transactions or deposits. In order to increase digital transactions, cash transaction could be capped at 5 lakhs. The SIT had suggested a 3 lakh cap, this could be hiked.
INCREASE IN MEDICAL REIMBURSEMENT CAP
In 1998 the government set the limit for reimbursement of medical expenses at 15,000 rupees.
With increase in lifestyle diseases and the rising cost of medical treatment, a case must be made for a hike in this limit.
The cap should, at the minimum, be doubled to 30,000 rupees. There should be a higher limit for senior citizens.
RAISE THE INCOME TAX BENEFIT ON HOME LOAN INTEREST
Increase in the deduction limit on housing loan interest. Its currently at 2 lakh. To spur the housing industry, currently experiencing sagging growth, and incentivise affordable housing, the deduction allowed should be raised to 5 lakhs
EXTEND LEAVE TRAVEL CONCESSION TO OVERSEAS TRIPS
Currently, leave travel assistance (LTA) is eligible for tax relief for two journeys in four calendar years.
This is restricted to economy class air fare or first class rail fare within India. With increased awareness, and availability of cheap holiday packages, this should be extended to international destinations.
Further, the tax benefit should be available for each financial year instead of restricting it to two journeys.
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