The full Budget of 2014-15 is going to be the
first official opportunity to implement the economic agenda where in Government
will have to do a fine but difficult task of managing the conflicting needs of
variety of stakeholders – business & industry, trade, commerce, exporters,
banks, investors, agriculturists, house-holds, society and politics as well. The
forthcoming budget should not only be investor friendly and taxpayer friendly
but also be forward looking and progressive giving policy directions and
Initiated by earlier NDA Government, GST has
been talked about by all Governments since then. Now that we have a
stable Government, the Budget should clearly redefine the road map to much
awaited GST and announce a sunset date for the transition to GST regime. It
could be 2015 or even 2016, given the issues pending with the Empowered Committee
of State Finance Ministers on GST.
The BJP Government is likely to make
implementation of the Goods and Services Tax (GST) a priority as it gets down
to work. The Finance Minister held a meeting with officials of the Revenue
Department of direct tax and indirect tax to get an overview of the taxation
issues. The Revenue Department has been asked to prepare a presentation for the
new Finance Minister, detailing the features and architecture of GST, the areas
of disagreement with State Governments and other issues that have delayed the
implementation of the indirect tax regime. The Finance Minister is also
expected to soon meet various State Finance Ministers to sort out differences
and ensure an early rollout of GST. It is hoped that new Government may be able
to move the official amendments to the Constitution Amendment Bill, key to the
introduction of GST in the monsoon session of Parliament.
It has already been hinted out that the
Government is keen on early rollout of GST. The BJP manifesto had promised to
bring on board all State Governments in adopting GST. Earlier Gujarat and
Madhya Pradesh were opposed to GST format but since both these states are
governed by the same ruling party as at the centre, there is bound to be
greater harmony this time which may pave a way for earlier implementation.
Finance Minster will have to build consensus about the GST among State
Governments. GST ought to be the top priority in the Budget.
On indirect tax front, while there is a need
for systemic reforms and forward looking pro-growth steps in general, the
Budget should lay emphasis on the following specific issues, besides laying a
clear-cut road map for GST implementation:
Enhancement of basic
exemption limit: Every
individual has the expectation from this budget is to enhance the basic
exemption limit from the current limit of Rs.2 Lakh. In the view of current
inflation & price level, the enhancement of basic exemption limit will
lower the tax of an individual and increase the spending habit.
Revision in conveyance
related allowances: Current
exemption limit of transport or conveyance allowance u/s. 10(14) Rs. 800 per
month has been fixed long years back. However the fuel price has been increased
twice or thrice comparing old rates. But the limit of conveyance or transport
allowance still in the same limit. The same issues are facing in the valuation
of car perquisite which contains the fuel expenses. These limits related to
fuel expenses can be relook by the government.
Revision in the
medical expenses related exemption: The exemption of reimbursement of medical
expenses limit of Rs.15000 per annum is the very low limit comparing the cost
of medical expenses in current scenario. This can be relook and correct the
Revision in education allowances: The exemption of
educational allowance Rs.100 per child per month & hostel expenses
allowance Rs.300 per child per month is the limit fixed long back. The same
limit can be revisited and correct according to the current cost of education.
Even though the deduction of tuition fees allowed under
section 80C up to Rs. 1 Lakh, expenses other than tuition fees also is the
major amount in current educational costs.
Deduction in respect
of notice period pay: This is most debatable issue during the change of
employment. If employee resigns from the current employer and going with
serving notice period, the payment made by the employee to employer to
compensate will be deducted from his salary payable. But as per tax calculation
it will be shown as income but there is no clear provision in deduction for the
same. So it can be considered in this budget.
TDS problems facing
by individual: Common
problem facing by salaried individual/ non salaries case also is that TDS
credit is not reflecting in the form 26 AS and unable to match the TDS amount.
Even though TDS amount recovered from the income and deductor fails to pay the
TDS or not update the TDS return, it is not reflecting in the form 26AS. This
is very embracing situation for any person, after paying tax also not getting
credit due mistake of others. Even though some recent judgments are favored to
the deductees, however this has to be provisioned in the act itself to avoid
the litigation issues.
Simplification of tax
/ duty structure with
few rates at least for one year till economy is back in blac
Reduction of Excise
and Service Tax rates by at least two percent to boost production, growth in services
and address inflation
cesses and have separate allocation for the same
Remove confusion and
double taxation /
overlapping tax regime with simultaneous levy of VAT as well as Service Tax
in certain cases
Refunds in Excise and
Service Tax should be made simpler, faster and hassle free
Benefits / exemption
to special economic zones be rationalized
There should be no
retrospective tax provisions which give rise to tax liability. There has to be no
room for uncertainty
Multiple audits and
investigations must be stopped. There should be single point jurisdiction
for enquires, investigation, audit, adjudication etc.
ought to be made more accountable and assessee friendly
Tax reforms must also
look at lowering of compliance costs.
mechanism may be made simpler and reduce administrative cost
Excise duty cuts
shall boost industrial growth and consumption
Tax audit on the
lines of income tax may be introduced in Service Tax
ought to be trained in law, interpretation and time management skills
CST rates may be lowered in the wake of GST.
Conclusion: As per the purview of
income tax act, Salary income is treated as risk free nature, hence most of the
part of income is fully taxable, however the expenses depends on the inflation
and other factors has to be revisited by the department and may make the
changes accordingly. It is the very basic expectation from the upcoming budget
by the salaried cases.