The salaried
class would be eagerly awaiting finance minister Arun Jaitley's maiden Budget
speech, likely in mid July. And why not. Just a month before the NDA won the
elections with a huge majority, Jaitley had suggested that the Income Tax
exemption limit should be raised to Rs 5 lakh from Rs 2 lakh currently.
Industry
body CII in its report titled Pre-Budget Memorandum 2014-15 has outlined a slew
of changes that should be made by the FM in that section of the Income Tax Act,
which impacts the salaried class.
Below are
the excerpts from the report
> Section
17 of the Income Tax Act, 1961 has been amended to include superannuation
contributions made by an employer to the account of its employee as a
perquisite. Accordingly, as per Section 17(2) (vii), superannuation
contribution by the employer in excess of Rs 1 lakh would be considered as part
of the employee’s salary income; thereby increasing the withholding tax
liability in his hands..
>
Provision to section 17(2) of the Act, medical reimbursements not exceeding Rs
15,000 per annum for employee and his family are exempt. This limit needs to be
revised and limit for exemption for medical reimbursements should be increased
to Rs 75,000 per annum
> (As per
rule 2BB of section 10(14) Limit of transport / conveyance allowance of Rs 800
per month not taxable was fixed long ago and since then the transport cost had
increased multifold, thus this limit should be rationalized to a minimum of Rs
3,000 per month.
>
Children education allowance should also be increased to Rs 2,000 per month, as
the current limit of Rs 100 per month, is too less and does not reflect the
high expenses involved in the current education system. Currently, the school
fees varies from Rs 2,000 to Rs 5000.
>
Children hostel allowance should also be increased to Rs 4,500 per month, as
the current limit of Rs 300 per month, is too less and does not reflect the
high expenses involved in the current system.
> An
independent deduction separate from the deduction under section 80C of the Act,
in respect of housing loan repayments (principal) should be provided. This will
help motivating people to repay the housing loans at a time when inflation is
very high.
>
Standard Deduction from salary, which was withdrawn from the Assessment Year (‘AY’)
2006-07 should be revived. A standard deduction of Rs 75,000 or 10 percent of
salary will bring great relief to salaried individuals. This deduction was
earlier available under Section 16(1).
> The
exemption limit of Rs 50 on the provision of free meals was introduced in 2001,
since then the costs have increased multifold, thus this limit should be
rationalized to a minimum of Rs 150 to help the common man cope with rising
prices of food items.
> The
exemption limit of leave encashment under section 10(10AA)) should be raised to
Rs 10 lakhs.
> It is
suggested with an increase in trend of travelling overseas, overseas travel
should also be included within the purview of exemption for Leave Travel
Allowance (LTA)
> It is
suggested calendar years should be replaced with the concept of Financial Year.
> It is
suggested that LTA exemption should be allowed each year as compared to twice
in block of four year.
> It is
suggested to clarify that the benefits under section 80CCD is applicable to
employees irrespective of the date of employment. Since this benefit is over
and above other retirement benefits the deduction in respect of employee
contribution to National Pension Scheme should be allowed over and above the
limit of Rs 100,000 under chapter VIA.
